Review Of Financial Products And Providers Welcome
Trustee Corporations Association Welcomes Review Of Financial Products And Providers
The Trustee Corporations Association (TCA), New Zealand’s trustee corporations industry association, believes that the regulatory regime proposed for the non-bank financial institutions and financial products will provide greater protection for investors and that a review is timely.
The proposals are set out in nine discussion papers released on 31 August. These proposals aim to enhance confidence and increasing participation in financial markets by both investors and institutions.
Bob Moffat, TCA’s executive director says, “We are comfortable with the approach taken which should strengthen current regulatory oversight and provide for greater disclosure and transparency. This should result in a better understanding of risk and return, so consumers can make more informed decisions.”
The TCA had worked with officials from the Ministry of Economic Development, the Securities Commission and the Reserve Bank of New Zealand on options for the reform of the regulation of non-bank financial products and providers, and the role of trustee corporations in the regulation of securities.
While the proposals, if adopted, would see Trustee Corporations lose their automatic right to act as trustees for debt and collective investment schemes, the TCA says its members are uniquely qualified and competent to undertake the enhanced supervisory role envisaged in the proposals.
“Trustee Corporations are not opposed to creating a level playing field for entry. The entry criteria proposed, the continuing compliance requirements and sanction of removal in prescribed circumstances appear to be well-considered and consistent with the intent of the reform. The proposal should bring about a regime whereby trustee corporations are better able to champion investors’ interests.
“We also welcome the proposal to include minimal protections and consistent disclosure requirements in trust deeds, and to make all trustees more accountable.
“However, the two tier proposals recommended in the review of non-bank deposit takers have some unusual consequences that TCA members will be reviewing. The coupling of credit unions and building societies with this proposition, because it would be more efficient, is a little baffling,” Mr Moffat said.
The TCA is currently consulting with members on the proposals and will make a comprehensive submission to the Review Team at the Ministry by 1 December 2006.
“Our members see this as a priority and are committed to study the proposals and to each address the questions asked, 495 in total. They will form a view and come back to us in early October prior to a workshop to be held on 19/20 October. We then plan to meet with the Ministry, the Securities Commission and Reserve Bank in early November prior to completing our submission.
“While some commentators may prefer the regulatory reform process to be fast-tracked, the TCA believes it is more important to get it right. A transition period may also be necessary to facilitate the commencement of the new regime. What we don’t need is to regulate in haste and then live to regret the decisions taken,” Mr Moffat said.