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Finance companies could improve disclosure

22 April 2005

Finance companies could improve disclosure to investors

Finance companies could improve the disclosure they make to investors, according to the Securities Commission.

“In particular the risks of the investment should be made clear to people who are considering investing with a finance company,” Chairman Jane Diplock said.

The Commission has today published its Report on Disclosure by Finance Companies. This follows a discussion paper released in September last year.

The report explains the Commission’s expectations for disclosure by finance companies under the Securities Act and Securities Regulations.

“We have identified areas where disclosure by finance companies generally could be improved in order to comply with the law” Jane Diplock said. “The report sets out the Commission’s understanding of certain aspects of the law and signals the approach that we intend to take in enforcement work”.

Each finance company must determine how it interprets the disclosure required by law and how it assesses the matters raised in the Commission’s report.

“The Commission will review a sample of finance companies’ disclosure documents later this year,” Jane Diplock said. “If breaches of the law are found, we will raise these matters with the finance company concerned and if necessary take appropriate enforcement action”.

The Commission’s report does not comment on the prudential supervision or status of finance companies, as the Commission does not have a function as a prudential regulator.

The report is available from the Commission’s website


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