“We fully support yesterday’s announcement by the Financial Markets Authority (FMA) regarding upholding directors’ obligations,” said Phil Newland, director for LPF Group. “It is critical that directors have a responsibility to maintain their governance standards and are not allowed to lower these, which will inevitably be at a cost to ordinary New Zealanders who invest their hard-earned money.”
“The FMA acknowledged the positive role litigation funders in New Zealand are playing in holding directors and corporates to account. Class actions that are adequately resourced by strong responsible funders are a powerful tool to keep corporate misconduct in check and to obtain financial compensation.
“New Zealand regulators must remain independent from the powerful business lobby that is advocating to lower standards, and strongly support better corporate behaviour and accountability to protect the public. Australian regulators are currently lowering governance standards following considerable pressure from directors, who are also calling for the abolition of litigation funding despite the lack of evidence supporting anything other than meritorious cases being taken. These changes are clearly driven by companies with little regard for the obligations they have to their investors.
“It’s very concerning that the Institute of Directors in New Zealand is also promoting a reduction in standards. Their focus should be on good governance rather than protecting their members at the expense of the public,” said Mr Newland.
Director Michael Stiassny adds “As a result of Covid-19, higher levels of vigilance and accountability are required as ‘mum and dad’ investors chase yield because of low interest rates.”
“If standards are lowered, regulators and funders will be left to perform the critical function of holding directors to a standard of behaviour that we should be entitled to expect. Otherwise we allow corporate self-interest to take advantage of the Covid chaos to suit their own ends – at the expense of ordinary New Zealanders,” said Mr Stiassny.
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Disclosure of Interests: LPF Group is the litigation funder of the Mainzeal, CBL, Ross Asset Management and Intueri claims seeking compensation for investors and creditors.