You could argue the horse has bolted in terms of super-regulating the financial markets – 30 finance company collapses in three years with less than a handful facing the long arm of any regulator.

But that would be backward looking and futile (rather the same futility mum and dad investors have felt as they watched $3-5 billion of their savings rorted with few repercussions for the perpetrators). Finally, the government has listened to what consumers (and our own organisation) have been saying for years, and more recently what its own capital market development taskforce has recommended – that the regulator must have teeth and be prepared to bare them. 

A new Financial Markets Authority, to be operating by early next year, will apparently be given all the fangs it needs to deal to this industry. As Commerce Minister Simon Power said: “If we can’t deal with these challenges in an effective and timely way, the only place people will feel comfortable putting their money will be under a mattress.”

The super-regulator will subsume the regulatory functions and powers of the Securities Commission, the Ministry of Economic Development, the Government Actuary and to a lesser extent the Stock Exchange. (Yes, that’s how many bodies regulated or rather didn’t this market).

There’s still a question for us over the role of the Commerce Commission and the policing of the Fair Trading Act, but we’re impressed with the speed with which this new Authority will be in place. It will need the resources to undertake the extensive investigations and litigation that may ensue, and a chief executive and board unafraid to take on this industry.

This will mean a new culture – one of activism rather than bemoaning the lack of tools to enforce securities regulation. And a culture that believes investors are worth protecting.

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