Finance company recommendations accepted by Govt

The government has accepted proposals by the Securities Commission to give trustee companies improved tools to supervise finance companies on behalf of investors.

Wednesday, September 12th 2007, 5:04AM

Commerce Minister Lianne Dalziel says Cabinet has decided to implement the recommended changes by facilitating the making of the regulations which are currently being drafted.

The amended requirements will automatically become part of every existing trust deed, and every new trust deed, and will therefore apply to all finance companies operating in New Zealand.

"On Thursday last week the Securities Commission provided me with proposals to ensure that all trust deeds provide trustees with robust powers to get the information they need to carry out their duties in the interests of investors. At its meeting yesterday, Cabinet supported the making of regulations which are now being drafted and which I hope to take back to Cabinet as early as next week."

The proposed changes strengthen the supervisory powers of trustees in the interests of investors including the power to obtain more timely and relevant reporting by finance companies together with the ability to bring in independent experts and to appoint an additional auditor if necessary.

One trustee company, Perpetual, has come out in support of the proposed changes.

Perpetual Trust chief executive Louise Edwards says under the proposed new rules, it will be able to better assess a finance company's financial position and act, if necessary.

"By giving trustees the power to appoint independent experts to report on the true financial position of the finance company at any time, and also the additional requirement for six monthly audited accounts, the Securities Commission is providing us with tools to better protect investors' interests."

Currently, trustee companies have limited ability to act on a company unless it has breached its trust deed.

"We expect these new and enhanced rules to assist us in obtaining up to date information. Hopefully investors will realise that their trustee is better able to protect their interests and they may have more confidence to invest in these companies, most of which are strong and have served their investors well over many years."

"We are currently closely monitoring all finance companies which have Perpetual Trust as their trustee and are seeking their financial position on a weekly, if not a daily basis. The companies themselves are keen to cooperate to calm investors' fears."

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