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Trustee Association Confident Of Non-Banks Recovery

Fuseworks Media
Fuseworks Media

Wellington, Nov 6 NZPA - Recent events in the financial sector are not in themselves a signal that the system has failed or that it needs major changes, the Trustee Corporations Association of New Zealand Inc says in its annual review.

The association is hopeful that the Government's deposit guarantee scheme and changes to regulation of the non-bank sector will restore investor confidence in the sector that encompassed finance companies.

Trustees are happy to continue as front line regulators of funds.

The association said 2008 has been a year of turbulence in the financial sector creating market conditions that had not been seen in a generation.

The deposit guarantee scheme and the changes resulting from the Reserve Bank of New Zealand Amendment Act would further enhance investor protection, chairman Clynton Hardy said.

Non-bank deposit takers will be licensed by the Reserve Bank and, from March 1 2010, it will be mandatory for them to have and disclose a credit rating from an approved rating agency.

The Reserve Bank will act as prudential regulator and trustee corporations will continue their role as the front line supervisors to ensure that issuers comply with the more exacting regulations.

The new legislation imposes minimum standards on Trust Deeds.

Total funds collectively supervised by members in trusts, group investment funds, managed funds, superannuation schemes, and participatory securities was $121 billion, down from $132 billion last year. Debt securities and unit trusts comprise around half of this total amount.

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