New FMA unlikely to win investor confidence

In reply to a letter seeking clarification on enforcement of Director’s statutory responsibilities under the Companies Act 1993, Simon Power has failed to repair the justified mistrust of the members of EUFA that compliance enforcement over finance markets will be any more accountable under the new Financial Markets Authority.

While failing to answer the specific question relating to the enforcement of Director responsibilities under the Companies Act 1993 the Minister referred to powers of the Financial Markets Authority Act 2010 over “a person’s right of action” stating that the “FMA will use this power sparingly”.

Speaking from Southland today Gray Eatwell said, “ It is obvious that the Government expects the formation of the FMA to restore investor confidence in the States ability to enforce compliance, but in reality the Act is simply shifting the deck chairs around different offices in Wellington.”

“In recent years our members have suffered the loss of their savings as a direct result of Directors of Finance and Investment Companies neglect of duty, but according to the Minister’s advice little has changed in the system’s determination to hold them to account.”

In the words of Simon Power when interviewed about the lack of governance of the Finance Industry leading to the collapse, Mr. Power said that the authorities simply “ looked at each other while investors money hit the floor”.

Mr. Eatwell added, “ Accordingly, given Minister Power’s current reluctance to clarify the enforcement of statutory duties under the Companies Act on Directors, while accepting that the FMA will only be applied “sparingly”, our members and investors throughout New Zealand must demand to know how the FMA can possibly protect future investments of their savings under such vagaries?”

Ends.

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