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A pensioner who invested $91,000 in collapsed finance company Nathans in May says she will "stuff the rest of my savings under a mattress".
Judi Soutar, who used to work at Nathans in the 1980s, told the Herald: "I now understand why people threw themselves out of windows
during the Depression."
The 67-year-old from Kerikeri, who spoke to two financial advisers before investing, is one of 6000 investors owed $166 million by Nathans - but finance experts yesterday warned anyone investing money that they couldn't blame their advisers.
Nathans Finance - a wholly-owned subsidiary of vending technology company VTL Group - was yesterday placed into receivership.
"It's taken 50 years of working and living a frugal life to save that money, which I was told was safe. It seems like a pack of lies," Ms Soutar said.
It added up to "virtually all my life savings" but some other investments would be taken out and put in the bank or under the mattress, she said.
But financial experts said investors had to shoulder part of the blame if their nest egg went down the toilet.
David Hutton, chief executive of the Institute of Financial Advisers, said investors had to balance the risk against the reward and do their own research, and not rely solely on financial advice.
The collapse of Nathans came about six weeks after the $450 million fall of Bridgecorp, which in turn followed the failures last year of Western Bay Finance, Provincial Finance and National Finance 2000.
Analysts are warning that other finance companies could be in danger as investors shy away from them.
Mr Hutton said investors should not put all their eggs in one basket, which also meant not putting all their money in finance companies.
The institute represents about 1400 financial advisers, who have to adhere to a code of ethics and practice standards.
But there were countless others out there because advisers don't have to be registered.
Roger Murphy, from accountancy firm Deloitte, said investors needed to ask some hard questions of their financial advisers, including whether they had read the prospectus, why they were recommending a particular investment and what they knew about the directors and financial management of the company.
The Government and regulatory agencies are being urged to act fast to shore up confidence in the finance company sector.
The Government is phasing in new finance sector rules over five years, which include mandatory credit ratings for non-bank deposit takers and insurers; prudential regulation and registration of all non-bank deposit takers and insurers; and regulation of financial advisers.
Brook Asset Management portfolio manager Paul Glass, a longtime critic of the lack of regulation and transparency applying to the finance company sector, wanted to see credit ratings introduced from international ratings agencies within the next six months, rather than in 2010 as planned.
