Regulation in New Zealand is not good enough for the country to become a super-hub for the fund management industry, says Securities Commission chairman Jane Diplock.
The Government is investigating the potential of establishing New Zealand as a base for international fund managers, but Diplock told TVNZ's Q+A programme yesterday
the country's regulations weren't up to the task.
"They're not good enough for it at the moment.
"Investors in Hong Kong and in Singapore have a better regulatory framework of managed funds than we do, and they won't recognise our managed funds framework."
However she said this would be reformed in a review of the Securites Act.
"Part of the Securities Act review which is coming up this year is going to address that particular point."
Diplock told Q+A that inadequate regulation was a factor in finance company collapses which have put more than $6 billion of investors' money at risk.
"There are many, many factors that led to the finance company collapses, and the regulatory desert was one of them. I think we certainly, looking back, could say we needed a better regulatory framework at the time."
She cited a lack of resources as a reason why it has taken so long to take action against finance companies and their directors.
"It's clear that the commission is under- resourced, there's no doubt about that.
"Each time we've gone to the ministry and they go to the Treasury to ask for funding, we've received about half or a third of what we felt we required."
She said she was motivated by the New Zealanders who had lost money in failed investments. "If you asked me what keeps me awake at night, it is precisely that people have lost this money, and that people's hopes and dreams have been destroyed."
The Government estimates that creating a managed fund hub could generate as many as 5000 jobs.
