KEY POINTS:
The Government will consider interim changes to tighten finance company regulations after the latest failure in the sector.
Commerce Minister Lianne Dalziel has resisted a kneejerk response to finance company failures but now has asked officials to look for "common threads". The recent failures have left "mum and
dad" investors bewildered and angry.
The collapses of Bridgecorp last month and Nathans Finance this week sparked calls for immediate action.
Nathans went into receivership owing $166 million to 7000 investors. Bridgecorp went under in a $450 million collapse.
The Nathans failure brought to five the number of finance companies that have folded since May last year, owing $1 billion to mostly small investors.
The minister said she wanted "to see whether any intermediate steps can be taken to improve the regulatory environment in the interim".
"I am also discussing this issue this week with the head of the Securities Commission to ascertain whether she feels that [the commission] has sufficient powers, along with the trustee companies that provide frontline supervision, in light of these failures."
This year Ms Dalziel announced changes to regulation of the sector but the strongest moves, including mandatory credit ratings and prudential supervision by the Reserve Bank, will not come into effect until 2010.
It is understood she will meet Securities Commission chairwoman Jane Diplock today, when the role of auditors, who supply financial information about finance companies to their trustees, will be a focus for discussion.
Ms Dalziel also plans to meet the Institute of Chartered Accountants, the auditors' professional body.
She expects officials to report back to her next week and said she hoped for suggestions for "regulatory, advisory or policy type changes" rather than a legislative fix.
However, she did not rule out a law change which she believed would be supported by other parties.
The receivers of Nathans Finance and its parent VTL yesterday said they were still in discussions with the trustee of another VTL-owned finance company, Chancery Finance, about whether the company should also be put into liquidation.
Company crackdown
* Proposed changes to the regulation of the financial services industry include:
* Finance companies face tougher regulations, including improved disclosure and credit ratings.
* Trustees will have their responsibilities beefed up and will be supervised by the Securities Commission.
* All finance firms and entities will face comprehensive registration requirements.
* Consumers can expect improved "plain English" disclosure from financial services providers and a better dispute resolution service.
