Commerce Minister Simon Power yesterday announced key Cabinet decisions around his major rewrite of investment laws driven at least partly by the collapse of New Zealand's finance company sector and the global financial crisis.
"The new legislation will be better for mum and dad investors as well as for companies looking to raise capital," Mr Power said.
Among measures likely to find their way into law by the end of the year are moves to tackle celebrity endorsements of financial products.
In Cabinet papers released yesterday, Mr Power said finance company collapses in recent years had highlighted the issue.
"In at least one case, a celebrity specifically endorsed the strength of a finance company," Mr Power said in what appears to be a thinly veiled reference to All Black great Colin Meads' endorsement of Provincial Finance as "solid as".
Provincial failed in 2006, owing investors $300 million.
"In another instance, the person may have been used because their primary employment created a sense of integrity", said Mr Power in a likely reference to Mr Long, who fronted One News between 1988 and 2003.
Hanover froze repayments to investors owed $554 million in 2008 just a month after the Advertising Standards Authority upheld a complaint against an ad that featured Mr Long saying Hanover had "the size and strength to withstand any conditions".
"Advertisements of this nature can have a strong influence on the decision-making process of investors when they are assessing investment options," Mr Power said.
He had asked officials for options to tackle celebrity endorsements, including "the possibility of celebrities being liable to investors for untrue statements" in the same way investment "experts" already are.
Mr Long said that had such a regime been in force at the time, he would not have agreed to front Hanover's advertising.
However, he believed it was "a bit unfair" to hold celebrities responsible for investment losses on products they endorsed when it was unlikely they would ever know exactly how sound the company they were endorsing was.
However, he never believed anyone would invest in Hanover "purely because I said so".
Meanwhile, other issues to be tackled in what is the first major overhaul of key finance market legislation in more than 30 years include the laws around "collective investment schemes" such as KiwiSaver and other managed funds typically used by people to save for retirement.
Problems identified in the existing regime for these schemes included inadequate supervision of their managers, who were not sufficiently accountable to investors anyway, and a lack of standardised information about the performance and value of funds and difficulties for investors who want to withdraw their money.
