'Dressed up' property deals to be caught under new regulation

Responding to a question from the audience at a Financial Awareness Week breakfast held by the Institute of Financial Advisers in Wellington last week, Diplock said the Securities Act review will enable debate around whether the commission should be able to call in products, such as where people try to manipulate the real estate framework to actually give investment advice.

Diplock said her personal view was that property specialist Blue Chip was really constructed as an investment play "dressed up" as a property deal.

"Where such things as that occur, if we agree the Securities Commission should be able to call in such an investment, the Securities Commission will be able to say - we deem that to be a security. When it is deemed to be a security, then all the Securities Act requirements apply," she said.

However, this would not deal with real estate agents who, for example, might suggest an investor is better to buy a particular investment property than to invest in shares.