KEY POINTS:
The Cabinet yesterday signed off new regulations to ensure finance companies give more information to the trustees supervising them on behalf of investors.
Commerce Minister Lianne Dalziel said her colleagues had agreed to waive the usual 28-day waiting period for regulations to come into force and they will come into effect at the end of this week.
The changes to regulations follow recommendations from the Securities Commission after a number of finance companies fell over in quick succession. They have been hit by a fall in investor confidence in riskier investment options.
Last week, the Government also announced that it would introduce laws on the regulation of non-bank deposit takers - such as finance companies. This will bring their financial and governance affairs under the supervision of the Reserve Bank.
Ms Dalziel said she was concerned that some commentators seemed to think that the sector was completely unregulated, because the Government was overhauling the framework.
"The sector is regulated, but ... the framework is not as strong as it could be," Ms Dalziel said.
The changes to regulations agreed by Cabinet included:
* Reporting by issuers to trustees including monthly reports on liquidity, asset quality, reinvestment rates
* Reporting any breaches of financing arrangements with third parties
* Allowing trustees to engage - at the finance company's expense - an expert to report on the company's true financial position.
- NZPA
