Finance firm inquiry 'whitewash'

Lianne Dalziel says the inquiry won't duplicate work already under way.

Parliament's commerce select committee will hold an inquiry into finance company failures but investor advocate Suzanne Edmonds fears the terms of reference suggest the result will be a whitewash.

Committee chairwoman Lianne Dalziel, who was Commerce Minister during the period when more than 40 finance companies and investment funds went to the wall in three years, locking up or losing more than $6 billion in investor funds, said: "These events have raised a number of significant issues with regard to practices in the finance company sector and the legal frameworks that govern the sector.

"A number of the issues involved have been identified by the current and previous Governments - in some cases legislative changes have been made and new regimes are being implemented.

"In other cases major policy processes are under way that are likely to result in further legislative change."

Dalziel said the committee was not going to duplicate work that was already under way.

"Rather it wishes to focus on issues that do not appear to have been identified within current work programmes, and on particular issues which may benefit from the scrutiny a select committee can bring to bear."

But Edmonds, who leads investor advocacy group Exposing Unacceptable Financial Advice, was unimpressed.

"The inquiry is a whitewash as it is not going to address the issues raised with the Minister of Commerce and Justice last week.

"I'm pretty disappointed in the terms of reference," she told the Business Herald.

"I'm only hopeful the people on the committee will listen to victims of finance company mass malpractice who come and represent to them their situation.

"We said in the report we put out in April that we were frightened the terms of reference wouldn't be satisfactory and our fears have been realised."

Edmonds would have liked to see an inquiry into why relevant authorities were not investigating various finance company directors and enforcing existing laws including the Fair Trading Act more rigorously.

"There's no use in introducing a whole lot more legislation if Government doesn't want to ensure those laws are enforced."

Act MP John Boscawen, who has lobbied for a parliamentary inquiry into the finance company collapses, welcomed yesterday's news as "a step in the right direction" and "a personal victory".

"I am strongly urging investors to have their say so that this situation can be resolved and future investors are protected from the tragedy and heartache that we have witnessed to date."

Roger Wallis, partner at law firm Chapman Tripp, which has acted for the majority of finance companies that secured moratoriums, said the inquiry "will provide a welcome opportunity to correct some misperceptions about moratoria and, perhaps, to revisit some earlier policy decisions".

THE ISSUES
Parliament's commerce committee will examine ways to ensure:

* Investors are well-informed about investment proposals.
* Investors understand the implications of a moratorium proposal before voting.
* Advance actions can be taken to reduce the chances of failure.
* Adequate measures or redress exist when failure occurs.