Many of you will be surprised (or have some other emotion) that the Financial Advisers Bill has been passed before the election. Commerce Minister Lianne Dalziel made it clear that was her intention and many doubted her.

I didn’t. I reckon there will be plenty of other political surprises in the next month and a half – the biggest one of course will be a Labour victory. I haven’t written them off and, yes I’m a bit of a lone wolf in this industry of ours, suggesting that Helen Clark could well be leading the next government.

One of the contrary things is that the finance industry tends to be reasonably conservative (no social concscience I hear in the background!) Quite a few people are highly active within National, others were unlikely enough to have their names included in Nicky Hagar’s book The Hollow Men. But the reality the Clark-led governments have been great for us. Why would you get rid of them?

I have no idea what National stands for or what it would do to help savings (other than its panacea for everything – tax cuts) and absolutely not a clue what it thinks of KiwiSaver.

Labour on the other hand has a long list of achievements starting with the NZ Super Fund, moving through to providing certainty around the state pension (for the record it is NZ Super NOT National Super), KiwiSaver, tax changes including the PIE regime (which is massive for us) and now more regulation around the advisory sector.

You could argue few industries have had more support and encouragement over the past nine year than savings.

I would have thought with these sorts of achievements the savings industry should be cheering on Labour.
It’s hard to get excited about what National has to offer, as we just don’t know. There is talk that it would cut back the employer contribution for KiwiSaver. That wouldn’t win it too many friends and from my perspective as an employer I’m happy helping my team.

Feel free to comment!

The Commerce Commission enquiry into Donal Curtin’s appointment as deputy chairman is nothing but a classic case of arse covering.

The whole thing raises some big questions and hopefully Hugh Rennie QC will give the commission and the minister’s office a kick in the butt over the affair.

Curtin’s background has always been transparent. Before he was appointed to the position of deputy chair, all that someone had to do was sit down at a computer and a) google his name, and b) go to the Companies Office and do a director search. It would take less than five minutes and all the information would be there.

I am certain this was never done by the minister’s office and if the commission didn’t do it what does it say about its powers of investigation?

I’ve known Donal for sometime now, many years in fact, and he is a straight up guy. He has written an economics column for ASSET magazine since it started and was used one year as a judge in the Financial Planner of the Year Awards.

The bit I don’t understand is what his role was as head of the investment committee at Vestar. Clearly Vestar had a knack of picking, with a high degree of accuracy, all the dud finance companies.

I’ve, for a long time, had a suspicion this was done outside of the committee, and was very much based around whether Vestar could squeeze extra commission out of a company for its support. I know that it approached some finance companies and asked for a special rate for bulk business – or some other cute expression. If the company said no, then clients weren’t put into the company’s debentures even though that company had a rating from an international agency.

This sort of practice is something which appears to be part of the Vestar model. When the company was called Northplan it did a similar thing years ago with property syndicated, especially from managers like Waltus.

It brings me to the question was Curtin involved in this finance company area with Vestar? My view is no. But as head of the investment committee he would have seen what finance companies were used and that should have set off alarms.

As for the commission appointment it would be useful to see a timeline of when he took on various roles as he had been at the commission for many years.

So the Reserve Bank is to oversee and regulate the non-bank deposit-taking sector to provide investors with more protection.

As reported during the week Parliament has passed a bill to give the central bank powers to regulate a sector which has certainly had some cowboys galloping around in it.

I do wonder whether this will make any difference, or if indeed it will provide the safety it is supposed to give.

Firstly, market forces are tidying up the sector and by the time the bank is up to full speed with this new job (2010) the only ones left will be the good guys and the smaller firms with special niche markets.

Secondly, a number of the finance companies are listed on the NZX and come under the continuous disclosure regime, however it would be fair to say the disclosure hasn’t been continuous, nor particularly transparent.

The third point, and we have seen this many times before, is that regulation isn’t particularly effective when creative accounting or misleading information is provided. The sorts of names which come to mind here are Enron and in New Zealand it seems Bridgecorp had a questionable way of disclosing information to investors and advisers.

Indeed I would suggest some advisers went out of their way to ask Bridgecorp questions about its operations and position prior to collapse, and it seems clear the information provided was misleading – at best.

The other plank of these regulatory changes are that trustee companies remain the frontline regulators for the bank.

There has been plenty of criticism over their performance and some of this is valid. One issue I have is that it appears some of these companies were happy to take on the role, collect the money and do bugger all. It even seems that some saw the finance company sector as an easy niche to concentrate on and earn a good income.

Now these companies have a heap of work on their hands as their charges have fallen over, or crashed and burnt.

I have heard stories, from trustees, that they took on companies with trust deeds which essentially meant the trustee couldn’t access relevant information. If this is the case they bring their whole sector into disrepute. Changes made last year give trustees more power to find out what is happening within the companies and this is arguably the biggest improvement which could have happened.

What is needed is more transparency around what is really happening inside the companies. This is the equivalent to continuous disclosure on the NZX and is essential for investor confidence.