Confusion over Crown Guarantees

Confusion over Crown Guarantees

An article published today on the web blog www.moneymarket.co.nz has highlighted the confusion surrounding the offers being made by finance companies about their Crown Guaranteed investments and whether or not the Crown Guarantee applies.

Website owner Terry Fullerton says “There have been reports in the media of a quote from a well known financial personality saying that any new money put with guaranteed institutions will not be covered under the extended scheme. This appears to be incorrect and has prompted SCF to issue the following response.”
SCF says "South Canterbury Finance Limited confirms that the current and extended Crown guarantee applies to all existing eligible investors in First Ranking Secured Debenture Stock and to all eligible investors making an application for First Ranking Debenture Stock issued in accordance with the terms of the offer in the Investment Statement and Prospectus registered on 12 April 2010."

Terry Fullerton says “Much of the confusion arises from SCF referring to their First Ranking Registered Debenture Stocks covered by the Crown Guarantee as Stock and their Unsecured Deposits as Deposits which leads to the conclusion that the Deposits are not covered by the Deposit Guarantee Scheme. It would have been much clearer if SCF had chosen to define their Deposits as Unsecured Deposits.

It is also noteworthy that while the SCF application form for an Unsecured Deposit clearly states “No Crown Guarantee” the corresponding application form for the Secured Debenture Stock makes no reference to the Crown Guarantee. The same applies to the Marac website where the table identifies non-guaranteed deposits but is silent on the guaranteed rates. According to Marac there are legal reasons for this which relate to the fact that all investors are not eligible and that the guarantor disclosure waiver has not been extended when the Crown Guarantee was extended.”

Moneymarket is a New Zealand financial information and forum website founded in 2005 and focusing on providing borrowers and investors with financial information in an easy to use format. Visit moneymarket at http://www.moneymarket.co.nz

ENDS

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