Treasury questions beefed up trustee powers for Securities Commission

In its Regulatory Impact Statement on the Securities Trustees and Statutory Supervisors Bill, the government department says its supports the proposed legislation "except for the requirements for trustees to report breaches in trust deeds in real-time and for the commission to have the power to direct trustees to take a particular course of action to remedy breaches."

It fears the power to direct trustee how to act will "blur the clarity between trustees and the Securities Commission" and says it does not fit will with the proposal to give the regulator the ability to take legal action against trustees, which would likely be exercised at the same time.

The Treasury paper also says the proposed power is "inconsistent with the RBNZ's powers as prudential regulator of non-bank deposit takers," and that it is "unclear why this power is necessary here when it is not considered necessary to ensure appropriate prudential oversight of NBDTs."

The requirement for trustees to inform the regulator of breaches in real-time could lead to "significant compliance costs that are likely to be borne by firms seeking to raise capital."