Mandatory credit ratings from March 1 (Update 1)

The Securities Commission today issued a guide for non-bank deposit takers pending the introduction of new credit rating disclosure regulations due to come into effect March 1, being prepared by the Ministry of Economic Development. (Update 1 includes a list of institutions likely to be below the threshold for compulsory credit ratings). Enforcement of deposit takers' disclosure requirements is the responsibility of the Securities Commission, its guidance note sets out its approach to disclosure of credit ratings for the period until regulations come into force.

"Credit ratings are important to help investors to assess the risks of an investment. Deposit takers must ensure that they give investors clear information about their credit ratings and what those ratings mean, and that references to credit ratings are not likely to mislead or confuse", Commission Chairman Jane Diplock says.

From March 1 all non-bank deposit takers must disclose their credit rating when they advertise promised rates of return. An exemption can be applied for where the deposit takers consolidated liabilities are less than $20 million (measured as an average over a 12-month period). See here for an updated list of all current credit ratings. The following is a list of institutions who are likely to be below the threshold for compulsory credit ratings: M05 Mutual Credit Finance H03 Heretaunga Building Society U03 United Credit Union G03 Gold Band Finance P05 Prometheus Finance F01 FAI Money C07 Credit Union Auckland P09 Viaduct Capital M06 Mutual Finance F03 FE Investmens R02 Rockforte C04 Citywide Capital N01 Napier Building Society F05 Finance Direct S03 Savings and Loans G01 General Finance Investors can find information about credit ratings and what they mean on the Securities Commission website.