Do You Know where Your Money Is? Product Disclosure Statements for Discretionary Investment Services
Emily Lou
University of Auckland, Grafton, New Zealand.
DOI: 10.4236/blr.2013.41006   PDF    HTML     5,198 Downloads   7,484 Views  


New Zealand capital markets currently do not serve retail investors well, creating investor skepticism regarding participation. A recent Reader’s Digest survey rated financial advisers among the least trustworthy of professions. This article maps the legal implications of the new measures introduced by the Financial Markets Conduct Bill 2011 to guard investor interests in relation to financial products and services. The paper provides a useful critique of the proposed reforms, in particular, whether the “Product Disclosure Statement” (PDS) and the new licensing of fund managers will give retail investors confidence in investing through financial intermediaries. The paper concluded with recommendation for New Zealand regulator to obtain inspiration from overseas model.

Share and Cite:

Lou, E. (2013) Do You Know where Your Money Is? Product Disclosure Statements for Discretionary Investment Services. Beijing Law Review, 4, 42-54. doi: 10.4236/blr.2013.41006.

Conflicts of Interest

The authors declare no conflicts of interest.


[1] Association of British Insurer (2006). ABI response to CESR call for evidence key investor disclosure for UCITS (pp. 1-4). London: Association of British Insurer.
[2] Australian Securities & Investments Commission (2011). Regulatory guide 228 prospectuses: Effective disclosure for retail investors (pp. 1-60). Victoria.
[3] Bank of New Zealand (2010). Submission to the ministry of economic development on the review of securities laws.
[4] Brunton, C. (2009). Financial knowledge survey (pp. 1-178).
[5] Burn, L. (2010). Kiss, but tell all: Short-form disclosure for retail investors. Capital Markets Law Journal, 5, 141-168.
[6] Central Bank of Ireland (2007). Guidance note 3/07 Undertakings for Collective Investment in Transferable Securities (UCITS) structured products and complex trading strategies-prospectus disclosure requirements.
[7] Chen, J., & Watson, S. (2011). Investor psychology matters: Is a prescribed product disclosure statement a supplement for healthy investment decisions? New Zealand Business Law Quarterly, 17, 412 435.
[8] Directive 2009/65/EC (2009). Regulations and Administrative provisions relating to Undertaking Collective Investment in Transferable Securities (UCITS).
[9] European Commission Internal Market and Services (2007). Simplified prospectus: Investor disclosure regime exposure draft: Initial orientations for discussion on possible adjustments to the UCITS directive (pp. 1-28). European Commission Internal Market and Services, Belgium.
[10] Financial Market Authority (2012). Guidance note: Effective disclosure (pp. 1-53). Vaduz: Financial Market Authority.
[11] Fletcher, H. (2010). Huljih fined for misleading KiwiSavers. New Zealand Herald. URL (last checked 15 October 2012).
[12] Fowler, R., Grieves, R., & Singleton, J. (2010). New Zealand unit trust disclosure: Asset allocation, style analysis, and return attribution. Pacific Accounting Review, 22, 4-21. doi:10.1108/01140581011034191
[13] Fund Advisers (2011). How discretionary management works. URL (last checked 20 May 2012).
[14] Institute of Finance Professionals New Zealand Inc. (2010). Submission to review of securities law—Discussion document part B answers to questions. Wellington: Institute of Finance Professionals New Zealand Inc.
[15] Kathleen, B., & Bancorp, T. (2012). The potential effects of mandatory portfolio holdings disclosure in Australia and New Zealand (pp. 1-57). Auckland: Massey University.
[16] Khorana, A., Servaes, H., & Wedge, L. (2007). Portfolio manager ownership and fund performance. Journal of Financial Economics, 85, 179-204. doi:10.1016/j.jfineco.2006.08.001
[17] Kukoc, K. (1998) Information disclosure in a competitive insurance market—The government role. EconPapers, 87, 224-246.
[18] Mace, W. (2011). Ex-fund manager up for sentencing. URL (last checked 20 May 2012).
[19] Marriner, K. & White, R. (2010). Finance advisers and act MPs inspire mistrust. URL (last checked 29 June 2010).
[20] Ministry of Economics (2009). Capital markets matter (pp. 1-124). Capital Market Development Taskforce.
[21] Ministry of Economics (2010). Review of securities law discussion paper (pp. 1-200). Ministry of Economics.
[22] Ministry of Economics (2011). Regulatory Impact Statement (pp. 1-28). Ministry of Economics.
[23] Moloney, N. (2010) How to protect investors, lessons from the EC and the UK. Cambridge: Cambridge University Press. doi:10.1017/CBO9780511674808
[24] Morningstar Fund Research (2011).Global fund investor experience 2011. URL (last checked 23 May 2012).
[25] Office of the Minister of Commerce (2011). Effective Disclosure paper to the chair of the cabinet economic growth and infrastructure committee: Securities law reform (pp. 1-91). Muang: Office of the Minister of Commerce.
[26] Rekenthaler, J., Swartzentruber, M., & Sin-Yi Tsai, C., (2009).Global fund investor experience, morningstar fund research. URL (last checked 1 April 2012).
[27] RaboDirect (2011). Public confidence in finance sector drops while people say investments worth more. URL (last checked 20 May 2012).
[28] Retirement Commission (2009). Finanancial knowledge survey— Summary report (pp 1-11). Retirement Commission.
[29] Rothschild, M., & Stiglitz, J. (1976). Equilibrium in competitive insurance markets: An essay on the economic imperfect information. The Quarterly Journal of Economics, 90, 629-649. doi:10.2307/1885326
[30] Smith, D. K. (2004). Is “due diligence” dead? Financial service and product disclosure under the corporations act. Company and Securities Law Journal, 22, 128-150.
[31] Technical Committee of the International Organisation of Securities Commissions (2009). Commissions principles on point of sale disclosure (Consultation report). URL (last checked 24 April 2012).

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.