Trustees to come under stricter supervision from October
by Paul McBeth
Aug. 30 (BusinessDesk) – Trustees will face a new licensing regime and tougher minimum requirements once a new supervision scheme comes into effect in October.
Commerce Minister Simon Power today announced the regime for all corporate trustees, including trustees of non-restricted KiwiSaver schemes and retirement village supervisors, will start on Oct. 1 under the Securities Trustees and Statutory Supervisors Act 2011.
Under the new legislation, trustees will have to meet certain conditions to monitor issuers of various securities.
“The regime addresses failures highlighted in the finance company collapses, and will help to protect investors’ interests, and enhance market confidence,” Power said in a statement.
“These regulations will help strengthen the quality of supervision provided by trustees and statutory supervisors.”
The Financial Markets Authority will oversee trustee supervision assessing trustees’ suitability to be licensed, and will receive regular monitoring updates from trustees. Trustees will pay a licence fee of $4,320.40 plus GST, though Power will go back to the industry as to the level of an annual levy.
In the regulatory impact statement attached to the October discussion document, the Treasury was critical of the annual price-tag of $600,000, saying the costs would ultimately be borne by firms seeking to raise funds.
In October last year, Power asked for submissions on the proposed legislation after trustees were included in the securities law overhaul after their failure to prevent the collapse of the finance sector through the latter half of the past decade.
In a report on the collapse, Companies Registrar Neville Harris was scathing of trustees’ diligence and accountability during this period, singling out Perpetual Trust Ltd. and Covenant Trustee Co. which oversaw at least 25 failed lenders.