News Round Up

Lee aims at advisers and talks lawsuits, Survey shows rates expected to be held, Kauri Notes offer gets away, PIS looking to buy, PIE loophole closed. Comment: Regulation won't save finance companies (or investors).

Monday, September 10th 2007, 5:25AM

As Good Returns reported in its Weekly Wrap to readers last week, advisers maybe in for a hard time.

Kapiti Coast adviser Chris Lee claims many investors have outlined to him some of the advice they have received from advisers, and, taken at face value, it doesn't make pretty reading.

If what is alleged is true then advisers are in for a rough time. You can read a summary of what Lee is alleging here.

Rates expected to be held
On the economic front all eyes this week are on the Reserve Bank and will it or won't it raise the official cash rate. Good Returns' survey of economists shows that governor Alan Bollard is likely to leave the OCR where it is. You can read a full report on what economists are thinking in Good Returns' Mortgage Centre.

Kauri Notes offer gets away
Savings & Loans has closed its initial Kauri Notes offer in New Zealand to retail investors.

"In the context of the current bearish global credit market conditions, this represents a pleasing result for the initial release of a new boutique product designed to generate regular income with the benefit of 100% capital protection provided by Merrill Lynch, one of the world's leading wealth management, capital markets and advisory companies," the company says.

Savings & Loans is pleased with the demand from Financial Planners for a regular supply of capital guaranteed investments which provide continuing income to their clients. The New Zealand investment market is short of investment grade income investment alternatives, particularly while the market is volatile. Savings & Loans intends to make subsequent offers of Kauri Notes to satisfy this investment demand.

Comment: Regulation won't save companies (or investors)
Talk of rushing legislation into action to avert finance company collapses is meaningless. The reality is legislation won't stop finance companies collapsing or investors losing money. [READ ON].

PIS looking to buy
Professional Investment Services (PIS) New Zealand is on the look out to acquire further financial advice and insurance businesses.

PIS chief executive officer Robbie Bennetts said the New Zealand arm had grown to a point it was ready to expand.

"New Zealand's financial advisory industry in a very exciting stage at the moment, with the Government having introduced initiatives such as the KiwiSaver scheme to encourage New Zealanders to further plan to self-fund their own retirement," he said.

PIS has a network of 60 advisers with funds under management of $230 million.

Bennetts has also flagged a possible 20% buyback of PIS NZ stock by the parent company.

PIE loophole closed
The government will close loopholes in the tax rules on portfolio investment entities (PIEs) to prevent their use by land-owning companies seeking tax advantages for their shareholders.

"It appears that, because PIEs can invest in land, some land-owning companies that run active businesses are contemplating using a gap in the new rules to structure the land part of their business as a PIE, to reduce final tax on shareholder earnings. That is against the policy intent of the PIE rules. The government will introduce legislation at the earliest opportunity to prevent it occurring, allowing sufficient time for consultation," Finance Minister Michael Cullen and Revenue Minister Peter Dunne said.

« Weekly Wrap: Advisers brace for more bad news

Sovereign takes regulation bull by the horns »

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