Inside Money: Got the finance company blues

The Securities Commission has been accused of being a bunch of useless layabouts. Photo / Thinkstock

All the moaning about the Securities Commission being a bunch of useless layabouts has finally paid off with the release of this truly depressing communiqué.

While it's not quite on the scale of a Wikileaks 'document dump', the Securities Commission list of actions against now-defunct finance eompanies - the 'failure files' - chronicles the horror of the last four and a half years beginning with the collapse of Provincial Finance in May 2006 and ending with the receivership of Equitable about a week ago.

"50 investigations, 35 directors prosecuted, 24 investigations ongoing," the Commission has, unusually, highlighted in a skite box on its news page.

The regulator has copped a lot of flak for the finance company rout but most of the blame lies elsewhere - it was, after all, subject to the prevailing laissez-faire mood of the times.

Understandably, investors now want government protection whereas pre-crisis most regulatory intervention would've been met with cries of 'nanny state'.

The nanny has now assumed control of the children with a whole raft of legislation including this programme to keep those unruly financial advisers in line.

Investor protection has also been provided in retrospect with the growing list http://www.treasury.govt.nz/economy/guarantee/retail/claims of claims on the retail deposit guarantee scheme (DGS). The good news for taxpayers is that there are only a handful of financial institutions http://www.treasury.govt.nz/economy/guarantee/retail/approved still covered under the DGS.

So are we all better now?

In September Gabriel Makhlouf, acting secretary to the Treasury, offered these http://www.treasury.govt.nz/publications/media-speeches/media/06sep10 soothing words to investors:

"If we could prevent collapses we wouldn't need the DGS! Collapses are a usual part of the cycle of renewal in a dynamic economy."

Until the next cycle of renewal, however, we're going to have to go through the DGS-angst, a regulatory makeover as well as post-collapse clean-up operations such as the Securities Commission failure files - all of which comes at great cost.

Of course, it would be much cheaper if we could all trust each other but when it comes to money the best attitude to assume is summed up by blues great BB King http://www.youtube.com/watch?v=OIW4ARVbhrw&feature=related : "Nobody loves me but my mother and she could be jivin' too."