Published 8 April 2011
Parliament unanimously passed a bill yesterday that plugs gaps that were exposed by the finance company collapses of the past 4 years.
The Securities Trustees & Statutory Supervisors Bill requires all corporate trustees, including those for non-restricted KiwiSaver schemes, to be licensed, along with certain statutory supervisors, including those for retirement villages.
Commerce Minister Simon Power said: “The licensing regime addresses the performance problems of trustees which were highlighted in the finance company collapses, and will help to protect investors’ interests and enhance market confidence.
The Financial Markets Authority, which will be operating from 1 May, will have the power to grant licences, providing applicants satisfy certain conditions such as having satisfactory monitoring systems, processes, experience, infrastructure & financial strength.
In addition, directors & senior managers of trustee companies will be assessed against “good character” requirements.
“This bill will protect the interests of investors by requiring trustees & statutory supervisors to be competent, perform their functions effectively and be held accountable by the Financial Markets Authority if they fail to meet expected standards.
“The authority will keep a close eye on trustees, which will have to provide regular reports on their compliance with the terms of their licence. The authority will also have increased powers to require information from trustees and order them to act in situations when investors’ interests are at risk.”
The bill allows the authority to seek redress for breaches of obligations via pecuniary penalties & compensation orders on behalf of investors. Failure to comply with the authority’s directions will be an offence under the bill, with penalties of up to $200,000.
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Attribution: Ministerial release, story written by Bob Dey for the Bob Dey Property Report.