Weekly Wrap: Tick tock, tick tock...

The clock is ticking on whether or not the Financial Advisers Bill (FAB) will make it through Parliament before it rises for the election.

Friday, September 12th 2008, 4:55PM

Judging from comments coming out of Wellington there is at least a 50:50 chance that the bill will be passed into law. Advisers will be pleased to see today’s story which outlines where the key associations are at with proposals. The PAA, IFA and SIFA are reasonably comfortable with what is being planned and say it is better than it could have been.

We ran another story on the FAB earlier in the week, called Adviser legislation enters final stretch. This reports on the latest changes to the bill.

Finance companies have, again dominated many of the headlines this week, as has yesterday’s official cash rate (OCR) cut. But before I get to those pieces we have a really good update on KiwiSaver and what is happening with fund flows. It already seems some funds are struggling to be meaningful. This report, plus comment I have had from individual providers suggest that the first wave of rationalisation may not be too far away. One option which I think you could see is smaller offerings being closed down and being replaced by white-labelled, or badged funds. We have already seen that with Kiwibank offering Mercer’s funds, and Mike Pero Mortgages and NZF Money using the Hulijich offering.

The other KiwiSaver story this week is an update on the changes rammed through Parliament which has effectively banned “total remuneration” packages.

In Insurance News this week Russell Hutchinson comments about how KiwiSaver has helped the risk market.

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Back to finance companies and the good news is that S&P has reaffirmed Equitable’s rating, although tagged it with some warnings. However, it is worth noting that S&P considers Equitable one of the better companies out there.

Meanwhile, Strategic is still working through its capital restructuring, but isn’t paying interest until the deal is finalised. With September 30 looming all eyes will be on which companies send out distribution cheques and who doesn’t.

The Dominion Finance saga looks worse and worse with the company being put into receivership, while its fellow company, North South Finance is granted a moratorium. I have to say the Dominion Finance mess is just that – an ugly mess.

News to watch out for in this sector is Hanover’s audited accounts and a decision out of Australia on the fate of Octavier (MFS). For these stories and more go to www.depositrates.co.nz.

Yesterday’s surprise 50 basis point cut to the OCR has triggered off a raft of home loan rate changes. You can keep up-to-date with what is happening here. No doubt lower interest rates will be an incentive for property investors. Recently property investment website www.landlords.co.nz conducted a survey of investors. The key findings were that quite a few are out in the ‘burbs looking to buy more property and a huge proportion of investors have been increasing rents.

This week’s People page has a new boss at ASB and a new chairman at ASFONZ. If you have a new appointment or know of any, please send an email to maddy@goodreturns.co.nz.

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