Celebrities who mislead public may face fines
DONNA WALSH/Waikato Times
CELEBRITY CATCH: John Morrison [insert] would endorse a financial product again but for Colin Meads, it's a case of once burnt, twice shy.
All Blacks great Sir Colin Meads says he would not do it again while former New Zealand cricketer John Morrison says he would, but no-one asks him any more.
They were responding to a draft bill on new securities legislation issued by Commerce Minister Simon Power that includes imposing huge fines on celebrities making false statements when endorsing financial products.
The draft bill includes penalties of up to $1 million for individuals and $5m for companies if they make misleading statements in a product disclosure statement and advertisements. Celebrities, however, would not face any liability if a product fails and if they have not made a misleading statement.
Concerned about exactly who would qualify as a celebrity, the Cabinet decided against banning their endorsements outright or penalising them if the financial products turned sour but they did not make incorrect statements.
Meads, who was criticised for famously describing failed car finance lender Provincial Finance as "solid as, I'd say", says he would not endorse a financial product again.
"Why would you?" he responded when asked whether the financial penalties contained in the Financial Markets (Conduct) Bill would deter him in future.
He said he deeply regretted the fact that people lost money after Provincial Finance collapsed in 2006 owing investors about $300m.
"No. I wouldn't do it again because you're just a figurehead in the organisation and not involved in the day-to-day running of those sorts of things."
He said he and his wife, Verna, also lost money they had invested in the finance company, though he would not reveal how much.
The latest receivers' report issued last month shows investors have been repaid 92.2 cents in the dollar, making it one of the higher payouts of the finance company collapses.
Morrison, the "mystery" spin bowler who played for New Zealand from 1973 to 1982 and is now a Wellington City councillor, publicly endorsed finance company, St Laurence, which sponsored his radio show.
When it went under, St Laurence owed 9400 investors about $212m plus interest but receivers have indicated secured debenture holders are likely to get only about 15 cents in the dollar when a third and final payment is made next year.
Morrison said he thought the penalties in the draft bill smacked of a "nanny state" and buyer-beware should prevail when people made investments.
He said he had not "tossed and turned at night" over his endorsement of the failed lender.
Asked whether he would endorse a financial product again he said: " I would, but no-one asks me these days. I'm just a humble councillor serving the people these days."
The bill largely completes the financial sector regulatory reform and its other wide-ranging measures include defining types of financial products, disclosure requirements, exemptions from the regime, managed investment schemes and providing the new super-regulator, the Financial Markets Authority, with additional powers. Submissions on the bill are open until September 6 and Power intends introducing it to Parliament before his retirement at the election. It is unlikely to become law until next year.
- BusinessDesk
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