One of the major conclusions of the Capital Markets Taskforce (CMD) was that New Zealand must clean up its act when it comes to financial market practices to have any hope of improving the allocation of capital across this economy.

We have a shocking bias towards property, driven to a large degree by the fear people have of being ripped-off by fast and loose operators in financial markets more interested in self-enrichment than managing people's savings.

The latest case of this sleaze occurred in the finance sector where operators used media personalities to promote their wholesomeness to the public, while making loans to related parties on non-commercial terms.

Folk fell for the advertisements and the promised headline returns and lost their lifesavings. The tragedy is they assumed market regulators would protect them.

The truth is quite different. The regulators are anything but pre-emptive, they work on a complaints-first basis so when you get mass destruction, they do too little and too late. The CMD highlighted this ineffectiveness and advised changes to both the Securities Act and its enforcement.

New Zealand has fallen so far behind in terms of the respectability of its financial market governance that there is a strong case for the regulators to adopt the American approach, where the enforcement agency can enter the premises of finance businesses and audit their processes.

In other words the state of trust in our finance sector is so bad we no longer can afford the luxury of waiting for disaster before regulators get off their chuffs and take action.

If we are to restore trust in banks that have ripped-off the taxpayer, in finance companies that mislead the public, and now also in KiwiSaver providers, then the public - or at least its agent, the regulators - needs to get tough. Real tough.

Take these lapses with Huljich Wealth Management (New Zealand) Limited, a relatively new entrant to the financial service industry that has its heritage in a sausage and salami company. It got the former National Party leader Don Brash to chair it, and has Auckland Mayor John Banks as its other independent director.

There seems to be an awful sense of deja vu here - like former All Black Colin Meads with Provincial Finance or former TV presenter Richard Long with Hanover. Neither of those celebrity endorsements helped the public, in fact they were instruments of abuse of the public's trust. With Brash and Banks we're at a totally different level, yet the company they're part of is gaining a questionable track record.

Where on earth are the myriad of government regulators who are supposed to be over this KiwiSaver thing? First we had Huljich paying salespeople to sell its KiwiSaver at street corners and door to door in South Auckland - totally against the rules.

Then Huljich's salespeople were found selling it to the mentally impaired in institutions.

Now there are suggestions they have been manipulating their returns through related party transactions. Concerns around this haven't been helped by Huljich's refusal to respond to these suggestions under the weaker-than-weak grounds of "commercial sensitivity" to disclose to anyone how their returns - which were miles beyond anyone else's - were achieved.

Don't the trustee and the regulators require auditing of KiwiSaver providers? I find it extraordinary that KiwiSaver is open to having apparent performance figures distorted by related party transactions. Certainly it would make a mockery of any performance surveys.

Financial markets are vital to this economy but for your own self-preservation make sure you get regular and full disclosure, so you can see how every dollar you save is invested and how it has earned its return.

Don't rely on the regulators to protect you, they are there simply to ooh and aah as the corpses stack up.

To the Government - get off your backside and start seriously implementing what the CMD told you to do. The longer you take, the deeper the hole this economy has to climb out of.

* Gareth Morgan is director of Gareth Morgan Investments, and Gareth Morgan KiwiSaver Ltd, and he was a member of the Capital Markets Taskforce.