KEY POINTS:
Government moves to tighten scrutiny of the $16 billion finance company sector are being slated as "too little too late" - as yet another firm faces trouble.
The suspension of trading yesterday in shares of the Christchurch-based Property Finance Group, which holds $80 million in fixed-term debentures from about 4000 investors, follows the Government's announcement of interim measures while it tries to speed up the introduction of mandatory credit ratings for finance companies.
A survey last year by accountancy company KPMG of 49 finance companies - each with portfolios of more than $50 million - found that only 11 had opened their books to scrutiny by ratings agencies, a situation the Government aims to rectify by 2010.
The sector has grown to a quarter of the size of this country's stock market, in which $65 billion is invested, compared with $83 billion controlled by the established trading banks.
There is a growing fear of the fallout on the economy as a crisis of confidence in the sector escalates.
After Nathans Finance this week became the fifth finance company to collapse in 15 months, Commerce Minister Lianne Dalziel held an urgent meeting with the Commerce Commission to discuss ways to fast-track regulation of the sector.
The Stock Exchange has also written to the minority of finance companies which are publicly listed, seeking confirmation that the market is being kept fully informed of any information that could affect their share price.
Brook Asset Management portfolio manager Paul Glass, who is concerned about the wider economic ramifications of a general collapse of the sector, termed the measures as "too little too late".
