26 Nov 2010

Tougher regulations needed to protect NZ

8:18 am on 26 November 2010

The Institute of Directors says a tougher regulatory system is needed to protect New Zealand against future financial shocks.

President Kerry McDonald, who also chairs the Savings Working Group, says New Zealand's response to the global financial crisis was unsatisfactory, and it hurt investors and the capital markets.

Dr McDonald says the previous Labour Government should have stepped in earlier, and appointed statutory managers to collapsing finance companies, where there was clear evidence of wrongdoing.

"The slow response was very damaging and a lot of people have lost money," he said.

"There is a pretty jaundiced view in the community about our capital markets and it is essential to address that through clear and tougher regulations."

Dr McDonald says a greater focus on exports and savings will also be critical to helping the economy withstand future shocks.

He says that's happening to some extent, but he fears it won't be a permanent change.