KEY POINTS:
Lombard Finance's proposed moratorium has come as a surprise to some in the industry but is not expected to prompt investors in other finance companies to pull their money out.
NZX-listed Lombard Group announced the plans for its subsidiary yesterday.
Dominion Finance chief executive Paul Cropp said the call had come as a surprise because the company had been projecting a positive future.
"The way they had represented themselves to the market was they were OK."
Last year many finance companies were brought down after Bridgecorp's collapse as investors rushed to exit the industry. But Cropp said finance company problems were no longer gaining such a strong reaction and re-investment rates were suffering more from competition with banks who had upped their demand for equity in recent months as borrowing had become more expensive.
Hanover Finance chairman Greg Muir said problems with another finance company were never helpful but he did not expect to see major fallout as Lombard Finance was not a big player.
Muir said finance companies were tied up in almost every part of the property sector and the slowdown in lending was of "genuine economic concern".
He estimated somewhere between $20 billion and $30 billion was not being loaned because of the fallout in the finance company section.
Strategic Finance chief Kerry Finnigan said what was happening in the global markets and its effect on banks was of more concern than another firm with problems.
"People are just generally concerned about what to do with their money."
