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Policy work on legislation enabling class actions should happen this year, government says

Tuesday 3rd April 2012

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Policy work on legislation to enable faster, better and cheaper class action suits should occur this year, the government said in response to a select committee report.

The government expects policy work on law to let multiple litigants start a single proceeding against one or more defendants relating to claims from a similar or related circumstance will be carried out this year, it said in response to parliament’s commerce committee report into finance company failures.

Among the report’s recommendations was that this parliament progress legislation on class actions. It also pushed for that legislation include guidelines for the operation of third-party funders of litigation, which the government will consider in its policy work this year.

The report, published in October, stressed the need for better funding to educate New Zealand’s investors, which it said should be a priority for the government. At the time, the committee said it was reasonably happy with steps taken to improve securities law.

The government said it spends roughly $5.7 million a year on the Commission for Financial Literacy and Retirement Income and doubts more funding is necessary at present. It was also happy with the level of funding for the regulator, the Financial Markets Authority.

Government supported the general nature of the committee’s 13 recommendations, and said it had largely acted to address those issues through the raft of legislation pushed through in the previous parliament.

The response pointed out government will get another opportunity to tighten things up in 2016 when the new regulatory regime for financial advisers is reviewed. It will also have the option of reviewing financial adviser commissions at the end of this year.

The government didn’t think it necessary to require issuers seeking a moratorium to refer to such a deal as a ‘creditor compromise situation’, nor that changes were needed to create greater protections for whistle-blowers.

The previous government referred the law of trusts to the Law Commission for review in 2009, and until that work is completed, the administration won’t be able to assess whether reforms will enable out-of-pocket investors to seek redress from assets locked up in trusts. The first stage of the review is expected to be published later this year.

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