Industry benchmarks needed for finance sector

News Release 31 July 2007

Industry benchmarks needed for finance company sector

“Recent publicity on the failure of finance companies that have gone into receivership
highlights the need for improvement in how companies operate and that customers need to demand more from the financial companies they invest in”, Chief Executive of Strategic Finance Limited, Kerry Finnigan, said today.

The comments follow today’s announcement by receivers for Bridgecorp Limited that investors could expect a payout of no more than 34 cents for each dollar invested in the company.

“Clearly this news will be of little comfort to the thousands of mum and dad investors who entrusted their money to Bridgecorp,” Mr Finnigan said.

“While the collapse of Bridgecorp should be seen as the exception rather than the norm, it is a timely wake up call for the industry to consider developing shared industry standards and benchmarks that will strengthen the transparency of the sector as a whole.”

“Investors must be able to make sound investment decisions with confidence that the finance companies they are investing in are straightforward and unambiguous in their transactions.

“The sector must therefore demonstrate its commitment to strengthening the disclosure and governance arrangements of finance companies.

“Our view is that investors should look for finance companies that maintain strong levels of liquidity, have significant equity ranking behind debenture investors, low levels of related party lending and have robust and independent governance arrangements detailed in a published governance charter.”

Mr Finnigan said that Strategic Finance is proud to be an industry leader and that he is looking forward to working in partnership with Government and others in the sector, as Government plans to introduce legislation to regulate the non-banking finance sector by Christmas.

ENDS

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