Liam Dann: It's about ordinary investors

The Hanover investors who grudgingly voted for the Allied Farmers deal probably haven't had time to digest the contents of the capital markets report.

When they do, they can take cold comfort from the fact that the taskforce decided it is investors like them who are the priority if New Zealand is to build a stronger and more productive market environment.

While the report does push for some big fixes - like the partial float of state assets and a focus on agricultural commodity trading - it acknowledges that unless we improve the level of trust and confidence the wider public has in markets, we will be doomed to face the same problems time and again.

The past three years of finance company failures have done enormous damage to public confidence in the investment sector.

Many of those caught in the collapses were the same people whose faith in the stock market was shattered after the 1987 crash.

In most cases the anger and hurt investors express is born of frustration that they did not understand what their money was being used for.

It is impossible to protect people from risk when they invest.

But it is not unreasonable for investors to expect that the level of risk is fairly disclosed. So the taskforce is to be applauded for offering pragmatic solutions.

One of the simplest is the suggestion that companies seeking to raise money from the public should disclose clearly what the money will be used for - in short, plain English documents with explicit warnings on any complex or high-risk products.

Full disclosure, while also important, has too often allowed companies to bury the riskier aspects of their product deep in a jargon-filled prospectus. Let's get specific about the points they must emphasise.

This report offers the Government the chance to build a solid foundation on which capital markets can grow.

The country needs to make a fresh start with new rules or risk losing another generation of potential investors.