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DISCLOSURE BY FINANCE COMPANIES
A DISCUSSION PAPER
SECURITIES COMMISSION
24 September 2004
SECTION 1 - KEY PROVISIONS OF THE ACT AND REGULATIONS SECTION 2 - RISK DISCLOSURE AND RETURNSThe risk/return relationship of the investment must be made clear to investors
SECTION 3 - RANKING OF SECURITIES
Principal risks for disclosure in the investment statement
Disclosure about risk and company activities in the investment statement
Risk and disclosure about related party lending
Conduit issuers and funding vehicles
Possible distortion of the risk/return relationship
Risk and finance company policies on lending and outstanding debts
Risks and the use of rating information by finance companiesDescription of ranking of securities in advertisements
SECTION 4 - OTHER DISCLOSURE ISSUES
Disclosure about prior claims and equal ranking claims in the investment statementConsistency between the investment statement and the registered prospectus
SECTION 5 - ADVERTISING
Maturity of investments
"How do I cash in my investment?" - disclosure about the effects of early termination
Date of investment statement
How much do I pay?
Ordering of information within the investment statement
Information on requestKey provisions of the Act and Regulations relating to advertising
CONCLUDING COMMENTS
Areas of common non-compliance concerning advertisementsProminence of required information in advertisements
Use of advertising or marketing agencies to prepare advertising
The advertisement does not refer to investment statement
Statements in advertisements about assets
Statements in advertisements about how the securities are secured
Statements as to safety
Statements in advertisements about the interest rate
The Securities Commission is an independent statutory body. The Commission has an enforcement function in relation to registered prospectuses, investment statements, and advertisements for securities offered to the public in New Zealand.
We invite comment on the matters raised in this discussion paper. Any comments received will be subject to the Official Information Act 1982. It is the Commission's usual practice to make submissions available on request. If you would like us to withhold information included in comments on this paper please state this clearly in your response. Any request to withhold information will be considered in accordance with the Official Information Act 1982.
Securities Commission
Level 8, Unisys House
56 The Terrace
PO Box 1179
WELLINGTON
Ph (04) 472 9830
Fax (04) 472 8076
E mail seccom@seccom.govt.nz
Web site www.seccom.govt.nz