The Capital Market Taskforce (CMD) made a series of recommendations in an attempt to restore confidence in capital market investment following the global financial crisis and the collapse of numerous finance companies.
Its report proposed making agreements less risky and providing accessibility of information on investment.
The taskforce encouraged opportunity for investment in New Zealand businesses and to sustain offshore interest in New Zealand investment sectors, such as agriculture.
Its recommendations included:
- For increased transparency, reports be given to prospective investors of only two pages which are easily comprehensible. These would appear on a central website. Risky or complex investments should feature a declaration.
- The taskforce recommends that product providers will owe a duty of care to investors.
Under this obligation, investment companies will nominate any limitations they have in this capacity. Investors will be informed on an annual basis where any breach of this duty has occurred.
- Financial advisory services should be subject to monitoring. This would avoid any conflicts of interest and prohibit people from marketing their services as 'independent' when they are receiving commission from sales.
- One objective identified by the CMD is for New Zealand to become a financial hub in the Asia-Pacific region. Prime Minister John Key has been given the full report, components of which are confidential. He has already expressed that New Zealand has an advantage over Australia in achieving this.
- Investment literacy to be introduced into the school curriculum.
- Partial privatisation of state-owned and local-body owned enterprises.
- The merging of current bodies would occur to form one enforcement body which consumers could complain to. This authority would also police any lapses of agreement entered to upon purchases.
- A more aggressive approach to be favoured in terms of the default scheme of KiwiSaver for new investors. The taskforce has called the current rate conservative and called for the mandate to be changed in 2014.