The Safety of Your Savings

Saturday, March 14, 2009

John Boscawen MP Speech to ACT Annual Conference 2009; Raye Freedman Centre, Epsom Girls’ Grammar, Silver Rd, Epsom, Auckland; Saturday, March 14 2009

Ladies and Gentlemen,

I have attended and spoken at many ACT conferences over the past 13 years – but this is my first as an ACT MP.

I would like to start – as I did at the recent ACT Hui – by saying how humbled and privileged I feel to have been elected to Parliament as an ACT MP.

Thank you most sincerely for the effort and sacrifices you made to, first, elect five ACT MPs into Parliament and Government; and second, to thank you for electing me personally.

I want to acknowledge everyone here today – particularly those who have travelled from afar.

One of the key policies that first attracted me to ACT in 1995 was its policy on superannuation. I referred to this specifically in my maiden speech, and the issue of saving and savers is one of the key topics I intend to focus on during my first term in Parliament.

Of particular concern to me is the fact that, over the past two years, some $6 billion has been lost – or is now tide up – in moratoriums and receiverships of finance companies.

This money has been lost by savers and – in large part – the elderly, who having worked most of their lives to raise families. They now face the prospect of losing some – or all – of their life’s savings. The impact on many thousands has been huge and traumatic.

Not only have these losses directly impacted on the lives of the people involved but, also, they have a huge impact on the economy and have obviously contributed to the recession New Zealand now faces. Money that the elderly had planned to spend in their retirement will no longer be spent – directly impacting on their quality of life, health and well-being.

It also concerns me that, in part, some of these losses appear to be the result of fraud – with some company directors already facing criminal charges.

The issues that have contributed to the receiverships of now some 46 finance companies need to be examined by Parliament, with a view to looking at the level of protections available to investors and what can be done to ensure that such massive losses do not happen again.

I am a member of the Commerce Select Committee and, earlier this week, called for a Committee enquiry into these issues. I am pleased to report that I already have early support from the Committee’s Labour and Maori members, and Committee Chair Lianne Dalziel has offered to work with me in drafting terms of reference for that enquiry to present to the committee when it meets in the coming Parliamentary recess. I hope to also obtain a National Party support to make that vote unanimous.

The need for an enquiry was further emphasised when Securities Commission Chair Jane Diplock appeared before the Committee as part of its annual review of the Securities Commission. She raised a number of issues for concern and highlighted that, in approving a finance company’s prospectus, the Commission is not endorsing it to prospective investors and nor can it ensure that funds will ultimately be invested in the manner originally laid out in the prospectus.

She also highlighted the potential conflicts between:

1. Trustee companies who supervise finance companies to ensure Trust Deeds are complied with.

2. The shareholders and directors of those finance companies.

3. Any receiver ultimately appointed to a finance company.

She also advised that the Securities Commission has no formal role in supervising finance companies now trading under moratoria, and this is particularly concerning as the directors who were responsible for the company who got it into difficulty are now responsible for trading it out.

The Commissioner highlighted the fact that many of the shareholders who voted in favour of the moratorium were essentially clutching at straws in not wanting to recognise the real losses they had incurred and were unlikely to recover.

This entire issue is one that must be addressed urgently by Parliament and cannot simply be swept under the carpet. As the year progresses, I look forward to raising other issues relating to saving and savers.