At first glance the MED discussion document (released yesterday evening) is well pitched to produce some practical reform. It poses sensible questions and does not make the mistake of assuming too much (other than the irritatingly frequent shorthand use of the term 'regulation' as if it is a self-evident good, without distinction according to purpose).

But it would have had more credibility as a first principles analysis if it had suggested, or at least asked about, suspension of the implementation of the morass of occupational regulation coming in this year for the benefit of those who will be left in the financial advisory industry (to the disadvantage of most investors) with damage to 'financial literacy' generally. I've been working my way for a client through the Financial Service Providers Act 2008 and the raft of patch-up and supplementary law (including the woeful 'pre-implementation adjustments" Bill on whichthe Select Committee reported on 11 June).  An ill considered mess is well down the tracks without any cost/benefit calculation I can find.

Why has there been so little attention to the potential costs of the new compulsory dispute resolution processes? They are not permitted to include any contraints or disincentives to baseless complaining. Costs will fall across providers and their customers generally.

And though the Securities Law discussion paper has useful description of issues to be considered in bulking up the FMA's enforcement role, it does not ask the  fundamental question – whether the benefits from a fat and now grotesquely costly superstructure of specialist securities regulation outweigh those costs, in comparison to spending the same or a lesser amount ensuring speedy, economical and effective enforcement of laws against dishonesty  of general application (i.e. not confined to 'securities' ).

To restore practical strength to laws against dishonesty could do more for New Zealand than fiddling with the lawyer wealth scheme that is what securities law has become. It would need court reform and changes to rules that protect fraudsters from exposure, and structures that shelter their ill-gotten gains. Requiring orders for  full recovery of legal costs (risk adjusted) from losers might help. Such a genuine reform would have lower risks of unintended consequence.

I'll be studying carefully  for unintended consequences those sections of the paper proposing new supervision of 'collective investment schemes'. Companies are proposed for inclusion as such. The limited liability company form has been refined for over 150 years. Such cultural taonga are always at risk from faddish remedies touted with the best of intentions.  Enthusiasts for change sometimes have little understanding of why their taonga works, and why it looks like it does. The paper sensibly appears agnostic in this area.

Businesses, and business organisations in particular, should mark 20 August as the closing date for submissions on this paper. Thoughtful input will be important.