Oh dear. It looks like a nice little earner for a few celebrities is about to become a tad risky for the buggers.
Those of them who lend their names to advertising campaigns to promote investment products might face stiff penalties under new laws if they are found to have misled mum and dad investors.
The Herald says Commerce Minister Simon Power yesterday announced a raft of Cabinet decisions on his major rewrite of investment laws, a response to the collapse of the finance company sector and the global financial crisis.
Among measures likely to find their way into law by the end of the year are moves to tackle celebrity endorsements of financial products.
In Cabinet papers released yesterday, Mr Power said collapses in recent years had highlighted the issue.
“In at least one case, a celebrity specifically endorsed the strength of a finance company,” Mr Power said in what appears to be a thinly veiled reference to All Black legend Sir Colin Meads’ endorsement of Provincial Finance as “solid as”. Provincial failed in 2006, owing investors $300 million.
“In another instance the person may have been used because their primary employment created a sense of integrity,” Mr Power said in a likely reference to Richard Long, who fronted One News between 1988 and 2003.
He promoted Hanover Finance, which in 2008 froze repayments to investors owed $554 million.
That happened just a month after the Advertising Standards Authority had upheld a complaint against an ad that featured Long saying Hanover had “the size and strength to withstand any conditions”.
Advertisements of this nature could have a strong influence on the decision-making process of investors when they assessed investment options, Power said.
And so he has asked officials for options to tackle celebrity endorsements.
These include “the possibility of celebrities being liable to investors for untrue statements” in the same way investment “experts” are now liable.
Alf commented on this issue around a year ago, when Richard Long (a) said he regretted his role as the television voice for Hanover Finance and (b) said he had lost about $50,000 himself.
“Nothing has changed. But I feel bad about the deal – really bad,” Long said from his home in the Coromandel.
And so he bloody should, Alf huffed.
He wondered how much Long had been paid to front Hanover.
It’s all very well to bleat about a $50,000 loss. But Alf suspects he did rather nicely, thank you, as the company’s Judas sheep.
In the Herald today, Long is saying that had the rules now being prepared by Simon Power been in force when he was asked to front Hanover’s advertising, he would not have done it.
He believed celebrities would now shy away from such work. “If that’s the intent then probably it will work.”
However, he believed it was “a bit unfair” to hold celebrities responsible for investment losses on products they endorsed when it was unlikely they would ever know exactly how sound the company they were endorsing was.
And with that remark, he tells us much about celebrity endorsements and their knowledge of the soundness of the companies they promote.
An article in the Herald in July 2008 did a nice job of reminding its readers how they – or some of them – had been star-struck when they took their money from under their beds and humped it down to a fine-looking finance company for safe keeping. Ha!
‘Solid as… I’d say!” That’s how Colin “Pinetree” Meads described Provincial Finance before it went into receivership in 2006.
The All Black legend is among celebrities to endorse finance companies as the sector’s reputation nosedived – with about 24 firms collapsing or running into serious problems in two years.
Former New Zealand cricketer John Morrison regularly extolled the virtues of Wellington finance company St Laurence, sponsor of his Radio Sport cricket show, until the company announced 12 days ago it had stopped lending ahead of a likely default and was withdrawing its prospectus.
And former TV One newsreader Richard Long has become the voice of Hanover Finance after narrating its regular spot accompanying the channel’s nightly weather update.
On that occasion Long said adverts for finance companies should be viewed no differently to those for other products.
He might try telling that to Simon Power, who obviously thinks otherwise.
But at the end of the day, there’s the old adage about fools and their money being quickly parted.
And if someone should stick their life savings into a finance company purely on the strength of a celebrity endorsement, only to see those savings evaporate when the company goes belly up…
In those circumstance, Alf is apt to recall a remark wrongly attributed to P T Barnum: there’s a sucker born every minute.