by Sonia Speedy
Responding to a question from the audience at a Financial Awareness Week breakfast held by the Institute of Financial Advisers in Wellington last week, Diplock said the Securities Act review will enable debate around whether the commission should be able to call in products, such as where people try to manipulate the real estate framework to actually give investment advice.
Diplock said her personal view was that property specialist Blue Chip was really constructed as an investment play "dressed up" as a property deal.
"Where such things as that occur, if we agree the Securities Commission should be able to call in such an investment, the Securities Commission will be able to say - we deem that to be a security. When it is deemed to be a security, then all the Securities Act requirements apply," she said.
However, this would not deal with real estate agents who, for example, might suggest an investor is better to buy a particular investment property than to invest in shares.
"At that point that person is becoming an investment adviser and that is where they really, if they want to be in that game, need to become a qualified investment adviser and they need to be authorised and the whole shooting box," Diplock said.
Financial advisers would need to stay on the look out for such practices and "dob them in" to the Securities Commission to deal with, once the new regulatory system is in place, Diplock said.
Labour commerce spokesperson and Commerce Select Committee chair Lianne Dalziel said real estate agents can say a particular product currently earns a certain rate of return, but cannot make predictions or expectations about what returns might be over a period of time.
"You can't cross that line," she said.
"When you cross that line you become an investment adviser."
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