30 Dec 2009

Finance firms will offer non-guaranteed investments

3:41 pm on 30 December 2009

At least two big finance companies are welcoming the chance to wean themselves and their investors off the Government's retail deposit guarantee scheme.

From the New Year, banks, finance companies, building societies and other institutions covered by the Crown guarantee scheme can choose to also offer non-guaranteed investments, as long as this is clearly disclosed.

PGG Wrightson Finance will offer investments not covered by the government scheme from early January. The company says the interest rate on these investments will be about 1% higher than on guaranteed deposits.

The company says a two-year transition period where investors can choose either guaranteed or non-guaranteed investments will allow people to get used to the fact they can invest in finance companies without the need for a guarantee from the Crown.

Marac Finance chief investment officer Craig Stephen says his company will also start issuing non-guaranteed investments in the first financial quarter of 2010.

It says institutions like finance companies will be able to promote debenture products and term deposits at guaranteed rates and non guaranteed rates from the New Year.