Treasury pans Power’s bid to fast-track super-regulator

The Treasury opposed Commerce Minister Simon Power’s bid to fast-track the formation of the super-regulator, saying it won’t boost investor confidence over the long-term.

Wednesday, July 21st 2010, 3:16AM 8 Comments

by Paul McBeth

According to a Cabinet paper, the government department said it was happy with streamlining the number of regulatory bodies dealing with securities law into the Financial Markets Authority, but was not convinced of the need for it to be set up by next year.

"We view the risks of seeking to significantly advance the establishment of the new regulator before a full picture of the regulatory regime it will operate within is finalised as significant," Treasury officials said. "We are also not convinced that accelerating the establishment of the new regulator by a matter of months will make a material difference to investor confidence in the long term."

The department warned the new regulator's independence from government meant it risked taking on unwanted cultures or behaviours from the existing bodies if the consolidation was rushed.

The proposed FMA will amalgamate the powers and functions of the Securities Commission, some of the functions of the Registrar of Companies and the Government Actuary, and some of the regulatory roles of NZX.

That includes operating the register for financial advisers and financial service providers.

Power also proposes to introduce a public register for securities to allow the public, financial advisers and investors to search for and access information about offers and other disclosure notices that are currently lodged with the Companies Office.

Former fund manager Simon Botherway is heading up the regulator's establishment board, which will set up the FMA, and he is widely tipped to take the top role when Securities Commission chairman Jane Diplock completes her term.

Paul is a staff writer for Good Returns based in Wellington.

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Comments from our readers

On 21 July 2010 at 9:30 am alan said:

I wonder how many advisers have read Gareth Morgan's article on page B4 of today's (July 21) Business Herald? He really gets stuck into the Code Committee claiming it has been captured by sector interests and implying that little will change and the investing public will still be faced by a largely poorly educated and self-interested advisor body.
Is he right?

On 21 July 2010 at 10:00 am BW said:

It frightens me that Botherway is being touted as a front runner for the FMA position - he should have been fired (given he has passed up the chance to resign)for not declaring his conflict of interest around SCF - the fact that Diplock covered for him re-affirms Morgan's point that the same cultures are being continued and nothing is likely to change.

On 22 July 2010 at 8:19 am Stuart said:

BW, I fail to see your logic. You have taken Gareth Morgan's article and twisted it to suit your wants.

On 22 July 2010 at 10:44 am BW said:

Stuart, I've included excerpts from GM's article for your assistance. There was also an earlier reference to poachers/gamekeepers. I think the analogy is fairly self-evident - however if you don't, then you don't.
Have a good day....
"There is absolutely no way the public should have any confidence in how the Financial Advisors Act is going to improve matters for the investing public. Industry capture of the process is too strong." ... and...
"What is far more pertinent to the public is that practitioners construct portfolios that are in the client's best interest, all charges are disclosed, and no conflicts of interest exist. This is the practice of advice and the only thing the Financial Advisors Act should be concerned with."

On 22 July 2010 at 1:13 pm Barbara Gordon said:

I agree with GM's comments that "there is absolutely no way the public should have any confidence in how the Financial Adviser's Act is going to improve matters for the investing public" etc. All the laws in the world won't make one iota of difference; just another lot of 'red tape' and more costs to all of us. After all, the law says that it is illegal to murder someone; it doens't stop all the murders that happen in New Zealand every year. So why anyone would think that the Financial Adviser's Act is going to stop all the problems that have been associated with 'rogue advisers' beats me.

On 23 July 2010 at 6:32 am Stuart said:

BW, The FAA was was drafted by the Code Committee. Botherway was not on that committee. Botherway is the chairman of the FMA Establishment board. Whilst I agree with the articles by BG & GM, your introduction of Mr Botherway into this discussion other than to support a gripe you may have with him is unwarranted. You may find a better place to vent your spleen on Facebook.

On 23 July 2010 at 9:37 am BW said:

Stuart, some rebuttals to each of you points before I sign off. One, FAA was not drafted by the CC (not even close). It was drafted by a Parliamentary body, with assistance from MED and the Securities Commission. Botherway is on the Securities Commission - though I don't see how any of these points are relevant. Two, true, which is why I'm frightened. I'm actually only a little frightened - I suspect Botherway is quite competent and possibly even has integrity. However, if he's going to occupy these positions and build public confidence he should have declared his interest on the Hubbard appointment. His failure to do so will provide fertile ground to Hubbard’s lawyer’s when attacking the appointment (which I understand is pending). Diplock's subsequent defence of Botherway to the effect that Hubbard has nothing to do with SCF is completely disingenuous (in my view). Three, I’m not sure who BG is. Four, I didn’t introduce Botherway (Mr) into the discussion. PM did, as author of the article on which you and I are commentating. Read the closing paragraph above. Five, I’ve never been on Facebook, so can’t really comment on it. However, why use it when we have a captive audience on Good Return?

On 28 July 2010 at 11:59 am NS said:

BW said: "However, why use it (facebook) when we have a captive audience on Good Return?"

Because we get sick of wingers bloating on about their favourite subject that has nothing to do with the text we're here to comment on. That's why facebook would be a great place for you BW.

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