Celebrities are likely to shy away from finance companies thanks to our new regulatory package

It has been one of Alf’s big disappointments that nobody has asked him to endorse their product in TV and other advertising.

He has especially yearned to promote his favourite whisky (he would happily name it publicly here, if its makers would pay him).

But he would never endorse a bank or a finance company, essentially because he regards bankers and financiers as the business world’s equivalent of cockroaches.

He keeps his money secured under his mattress. It’s not a huge fortune, but it is a tad lumpy because coins account for part of it, and so it is stored beneath the mattress on Mrs Grumble’s side of the bed.

Because of his attitude to bankers and financiers, Alf was disappointed when folks like Richard Long and Colin Meads helped persuade ordinary Kiwis to invest in this finance company and that.

And then, of course, the companies “failed” (to use the finance sector’s euphemism).

A great deal of government work has gone on since then to come up with regulations intended to protect the next generation of investors.

And – good move – the regulations extend to the celebrities who help the suckers part with their money.

The Herald reports on the matter today.

Celebrities who make misleading endorsements of finance companies will face hefty fines under laws being drafted by the Government.

Commerce Minister Simon Power has released further details of a major rewrite of securities law, including a liability regime under which anyone making misleading comments in a disclosure statement or advertisement for a financial product will be liable for a penalty of up to $1 million, plus compensation orders.

The Herald recalls that former TVNZ newsreader Richard Long endorsed Hanover Finance, which collapsed in 2008 owing $554 million to investors.

Former All Black Sir Colin Meads backed Provincial Finance, which owed $300 million when it went into receivership in 2006.

Neither knowingly made misleading statements, but their endorsements drew in investors.

The Herald has chatted with a feller named Glen Stanton, who was just nine days away from getting his $50,000 back from Hanover Finance when it collapsed.

Naturally, he’s not too chuffed about his investment decision and probably wishes he had done what Alf does with his savings.

He says Long’s endorsement gave him the confidence to invest such a large amount of money.

“I lost a lot of money in the other finance companies as well, but in most of those companies I [invested] smaller amounts, like $5000 or $10,000,” he said. “Hanover was the only one that I invested the large amount in … [Mr Long’s endorsement] gave you a feeling of false security, definitely.”

He supports the Government’s moves to introduce stiff fines for misleading endorsements.

If Long’s reaction to those moves is anything to go by, celebrities will be steering welll clear of this sort of work in future.

Mr Long has said he would not have done the advertisements had the proposed fines regime been in place.

He also said it was “a bit unfair” to hold celebrities responsible, as it was unlikely they would ever have known how sound the firm they were backing was.

And that’s where Long and Alf part company.,

Alf has been familiar with his favourite whisky for several decades.

He knows exactly how sound it is.

He would not endorse it otherwise.

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