The discussion on National Radio’s ‘Afternoons‘ programme with Jim Mora yesterday regarding celebrity endorsements was interesting.

Panellists Scott Yorke and Michael Deaker had differing opinions as to the Financial Markets Authority (FMA) might pursue former news anchor, Richard Long, over his involvement as ‘frontman’ for failed finance company Hanover Finance in terms of lending his reputation and name to the campaign.

Might the FMA have to pursue the copywriter, the ad agency, a voice-over artist as well as Long, for example? And might the perceived risk in terms of loss mitigate involvement if it’s low?

Not only did Yorke feel anyone investing in financial products probably wouldn’t be swayed by a celebrity endorsement, he also noted that even if Long had undertaken extensive ‘due-diligence’ to satisfy himself as to the robustness of the company’s financial performance and status, it’s likely financial advisers at the time may indeed have advised him that it was sound. Fair comment. Read the rest of this entry »

There have been mixed responses to the Government’s proposal to change legislation to make ‘celebrities’ liable for claims they make in so-called celebrity endorsements.

The New Zealand Herald’s editor feels celebrities shouldn’t be held accountable for claims they make. Rather, investors should be better-educated about investment decisions and not so easily influenced by prominent people used to endorse products or services.

Others, including Aucklander Glen Stanton, welcome the fact that under the proposed new legislation endorsers will face fines of up to $1 million as well as compensation orders. Stanton was less than 10 days away from receiving $50,000 from an investment in Hanover Finance when the company collapsed.

Former TVOne news anchor Richard Long’s endorsement of Hanover was a primary reason Stanton invested in Hanover in the first place. Commenting in the New Zealand Herald he said “I lost a lot of money in the other finance companies as well, but in most of those companies I [invested] smaller amounts, like $5,000 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.” Read the rest of this entry »