Among measures likely to find their way into law by the end of the year are moves to tackle celebrity endorsements of financial products.This has things precisely backwards. The problem isn't celebrity endorsement of investment product. Rather, it's folks willing to accept ex-rugby stars and former TV news announcers as providing expert investment opinion. Does Simon Power really think that but for the celebrity endorsement, the folks who put their life savings into dodgy finance companies paying a point or two above a Rabobank term deposit would suddenly become enlightened investors putting their money into passive diversified index funds?
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.
Mr Power said that "advertisements of this nature can have a strong influence on the decision-making process of investors when they are assessing investment options".
He had asked officials for options to tackle celebrity endorsements including "the possibility of celebrities being liable to investors for untrue statements" in the same way investment "experts" already are.
The law relating to untrue statements already allows for financial penalties, as well as compensation for anyone who loses money on an investment made on the strength of an expert's advice.
Why not be consistent: let any buyer sue any celebrity whose endorsement led to buyer's remorse. And the actors on the ads too. I want to sue all the people in the Mentos ads. I've no problem with the mints, but they never make me quite as happy as the folks in the ads promise. And the woman in that irritating cleaning product commercial who implies you can clean up your whole kitchen in about a minute if only you have the product she's selling. That's never worked out for me. And I want compensation.
I was going to embed a video of Weird Al's song, "I'll Sue You". But Sony's geographic restrictions mean I can't even watch it in NZ. I want to sue them too. And any actor who's ever appeared in their commercials. Only their punishment can make me whole. [Update: I also want to sue Weird Al. I had tickets for his Christchurch show. He bailed when the venue fell down due to the earthquake. But I still want to sue.]
If we're going to sue anybody over Mom and Pop investors making idiotic investment decisions, we ought to start with the government. The government's refusal to make credible commitments that they'd never ever bail out the folks who voluntarily chose to invest with risky finance companies probably led more investors astray than did any rugby star. Or maybe we ought to sue those investors who knew that the government couldn't help but bail them out if things went wrong.