Financial Markets Authority needs wide powers

Dalziel says Financial Markets Authority must have wide powers based on enforceable principles

Labour's Commerce spokesperson, Lianne Dalziel, wants the Government to ensure enforceable principles underpin rules that regulate the financial markets.

Speaking at a Securities and Investment Conference in Wellington today, Lianne Dalziel backed establishing the Financial Markets Authority, but said: “It must be under-pinned by a principles-based framework that enables it to take action where needed."

Lianne Dalziel said that she believed that enforceable principles, such as integrity, skill, care and diligence, reasonable care and financial prudence, were needed. “Unlike rules, such principles are not made to be broken. We need to be talking about how ethics are fundamental to ensuring trust and confidence in the financial sector can be rebuilt.

"I am concerned that people, who should have been held accountable, have been let off the hook, because they have complied strictly with the rules knowing full well that this has not given the investor a true picture of the risk, which would be a breach of all of those principles. We need a single-minded approach that says that the risk of getting caught is high and the consequences of conviction are severe.”

Lianne Dalziel said she remained concerned at double standards that seemed to be being applied to white-collar criminals. "I am constantly affronted at the discount our criminal justice system appears to afford the white-collar criminal over all other criminals, even though the wealth they have destroyed makes the proceeds of house burglaries pale into insignificance by comparison.

"I think we should allow our courts to impose what I now call the Madoff sentence for the most egregious cases. And there are some people who should never be allowed to fundraise from the public ever again or to claim the protection of limited liability against creditors – and those are the people against whom fraud has been proven. There should be no second chances under these circumstances.”

Lianne Dalziel said that she hoped that the FMA's legislative objectives would mirror that of its UK counterpart, the Financial Services Authority. They are:

o market confidence --- maintaining confidence in the financial system;
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o public awareness --- promoting public understanding of the system;
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o financial stability --- contributing to protection and enhancement of the system
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o consumer protection --- securing the appropriate degree of protection for consumers; and
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o reduction of financial crime --- reducing the extent to which it is possible for a business to be used for a purpose connected with financial crime.
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Lianne Dalziel said that she looked forward to the results of the Securities Act review and hoped that legislation would be introduced as soon as possible.

ENDS