Marac says investors not doing homework

The Crown deposit guarantee has led some investors to skip doing their homework and simply ask institutions if they have the guarantee, according to Marac Finance Ltd.

Prior to October 2008, investors had no Crown guarantee to rely on and they had to do their research and learn about the company behind the investment, Marac said in a newsletter.

It was increasingly important that investors ask these and other such questions as the guarantee is phased out, Marac said.

The first deposit guarantee scheme ends in October. An extended scheme with changed conditions operates until the end of 2011.

Banks are unlikely to be covered from October 13, 2010 as the Reserve Bank of New Zealand does not expect them to enter the extended guarantee scheme, Marac said.

In January Marac started to offer non-guaranteed term and call deposits to allow for a transition to an environment with no Crown guarantee. It has so far attracted $50 million of non-guaranteed deposits.

- NZPA