New rules requiring investment advisers to provide more information to investors come into force today as a result of the collapse of 16 finance companies in New Zealand in two years.
From today, investment advisers have to provide upfront disclosure of fees and remuneration, including commissions.
The move comes the day after MFS Boston became the 16th finance company in less than two years to go to the wall when it called for a moratorium on loan repayments.
MFS Boston, which has $38.5 million in investors' funds, proposed a ‘‘moratorium'' from its 1700 unit holders. With a meeting called for March 14, the fund promised it could still repay investors in full plus interest.
Nearly $2 billion has been invested in the 16 companies, some of which has been repaid by the receivers of some of them.
Securities Commission primary markets director Kathryn Rogers said that from today, investors should be given the disclosure statement without having to ask for it, and before they paid any money to an adviser.
‘‘Advisers have had since the law was passed in October 2006 to prepare their disclosure statements. We expect that they will have them ready for their clients tomorrow,'' she said yesterday.
Commerce Minister Lianne Dalziel said in a statement the new rules were designed to help inexperienced investors and they would ensure that investment advisers were transparent about the advice they gave.
The disclosure documents from investment advisers must include: -
Their experience and qualifications; Criminal convictions; The nature and level of fees charged; Other interests and relationships (including all remuneration); Types of securities the advisers advises on.
Disclosure statements must be kept up to date and must not be deceptive, misleading or confusing, Ms Dalziel said.
‘‘The new rules also beef up the Securities Commission powers. It will now police investment advertising and, if necessary censure advisers and brokers for misleading advertisements.''
