29 Apr 2010

Super-regulator to oversee troubled financial markets

7:34 pm on 29 April 2010

The Government has unveiled major changes to the financial sector, including a new super-regulator for financial markets and changes to the KiwiSaver scheme.

The changes were announced on Wednesday evening by the Commerce Minister, Simon Power, who said it would help restore the confidence of mum and dad investors.

The regulator, to be known as the Financial Markets Authority, will consolidate functions currently spread across the Securities Commission, the Ministry of Economic Development and the New Zealand Stock Exchange.

The authority will be responsible for regulating and overseeing trustees, auditors, financial service providers and financial advisers.

Accountants who carry out statutory audits will need to be regulated as a specialised profession by the New Zealand Institute of Chartered Accountants. The authority will oversee the institute.

Mr Power told Morning Report the collapse of a string of finance companies has highlighted a lack of regulation.

Securities Commission chair Jane Diplock says the finance company collapses were due to a "regulatory desert", and while that has to a large extent been corrected, the regulators still need to be pulled together.

Labour Party commerce spokesperson Lianne Dalziel supports the new authority, but whether it's effective will depend on the legislation setting it up and how much power and resources it is given.

KiwiSaver

Other changes include improvements to the management of KiwiSaver schemes.

Fund managers of retail KiwiSaver schemes will have to provide information to the public and regulators regarding their performance, investments and fees.

Market commentator Brian Gaynor says the Government is telling all investment managers that they now have to report on the same basis as default providers.

Mr Gaynor says these steps are needed to restore confidence in this country's capital markets, and predicts very few people will think this is a bad move.