Trustees to come under much stricter supervision

Commerce Minister Simon Power. Photo / Sarah Ivey

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 announced the regime for all corporate trustees, including trustees of non-restricted KiwiSaver schemes and retirement village supervisors, will start on October 1 under the Securities Trustees and Statutory Supervisors Act 2011.

Under the 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.

These rules will help strengthen the quality of supervision provided by trustees and statutory supervisors.

The Financial Markets Authority will oversee trustee supervision, assess trustees' suitability to be licensed and will receive regular monitoring updates from trustees.

Trustees will pay a licence fee of $4320.40 plus GST, though Power will go back to the industry as to the level of an annual levy.

The Treasury has previously criticised 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 during this period, singling out Perpetual Trust and Covenant Trustee which oversaw at least 25 failed lenders.