Moves to help mum and dad investors

Commerce Minister Simon Power yesterday committed to major change in the way the markets are regulated. Photo / Mark Mitchell

Mum and dad investors could get a one stop shop agency to watch over investments under a new proposal being considered by the Government.

In the wake of the finance company sector collapse, Commerce Minister Simon Power yesterday committed to major change in the way the markets are regulated.

The Companies Office, Securities Commission and the NZX Disciplinary Tribunal could be merged into a new market conduct regulator because the existing agencies failed to protect investors from finance company collapses, Mr Power said.

Yesterday he released the Government's action plan for responding to the Capital Market Development Taskforce report.

In December, the taskforce made 60 recommendations on ways to increase the attractiveness of capital markets to both companies and investors.

"It is important that those companies looking to raise capital and to gain equity from the wider markets have a decent regulation regime which gives them freedom to do that, but we need to balance that with mum and dads sitting in Tauranga with $5000, $10,000 or $50,000 to make a decision about where to invest those funds and making capital markets more accessible," Mr Power said. "After the last financial crash with respect to finance companies, a number of regulatory bodies [were] standing there looking at each other as investors' money fell to the ground."

Further work would be done looking at folding the powers and enforcement capability into one super regulator.

"We want everyday investors to feel more confident about putting their savings into capital markets, through understanding the basics of investment, getting advice they can trust, and making informed choices."

Mr Power said the Government was committed to introducing plain English documents for investment statements and prospectuses with warnings on risky or complex products.

The moves were welcomed by investor advocacy groups. NZ Shareholders Association chairman Bruce Sheppard said the suggestions were what it had been asking for for years.

Retirement Commissioner Diana Crossan said it was good news that the Government had acknowledged financial literacy was a part of rebuilding investor confidence.

Market commentator and investment manager Brian Gaynor said the ideas were aspirational but lacked action and the long timeframes for implementation meant there was a chance it would not happen.

The Government has said it would release a discussion document on the proposed single market regulator by April.

- additional reporting: NZPA