Wednesday 12th of March 2008

If ever there was a group of “advisers” who needed regulating then it’s the ones who sell all this Blue Chip stuff, or what we call packaged property investments.

NZ Property Investor Magazine has been examining the collapse of Blue Chip. What is amazing is that “investors” bought nearly half a billion dollars worth of property through Blue Chip in a year.

If you think about all the other crowds who are selling this stuff then the sector is a significant player in New Zealand’s investment markets.

Although people are being sold this stuff as an investment and “for their retirement” it falls outside of the securities laws.

This is absolutely ridiculous.

New disclosure laws that came in on February 29 don’t have any impact as the people selling this stuff aren’t investment advisers.

According to the Securities Commission an “investment adviser is a person who gives investment advice about securities.”

All this packaged property stuff isn’t a “security”.

My discussions with the Securities Commission indicate they don’t have any jurisdiction over this, rather it falls to the Commerce Commission under the ambit of Fair Trading Laws.

I can’t see this being particularly useful.

The next bit of adviser regulation is the bill currently before Parliament that “licenses” advisers and makes them all join an Approved Professional Body, who then regulates them. Again, it appears that these rules won’t capture people selling – I wouldn’t call it advising – on packaged property.

Commerce Minister Lianne Dalziel says she has an open mind to changes to the rules, but it is also understood any changes have to be careful and not capture ordinary real estate transactions.

That’s fair enough, but it can’t be to difficult to develop some rules which capture sellers of packaged property.