MORTGAGED POLICIES.

Auckland Star, Volume LXIII, Issue 183, 4 August 1932, Page 8

MORTGAGED POLICIES.

COMPLAINTS TO GOVERNMENT INSURANCE COMPANIES' ACTION. LEGISLATION FORECASTED. (By Telegraph.—Special to "'Star.") WELLINGTON, this day. A point of misunderstanding, concerning the application of the recent interest-reducing legislation to mortgages of insurance policies, was referred to by the Prime Minister, the Eight Hon. G. W. Forbes, to-day.

In the terms of the National Expenditure _ Adjustment Act, said Mr. Forbes, the interest on all mortgages to which the Act applied was reducible by 20 per cent, but it Mas provided that the not rat 6of interest payable under a mortgage of chattels should not be reduced below (U 7>er cent, and the net rate payable under any other mortgage, below 5 per cent. ' •

"A mortgage of a /life policy is a mortgage under the Act," he said,*"but it is reported that certain insurance companies arc treating the mortgages of their policies as mortgages of chattels, with the result that such companies have declined to reduco the rate of interest payable on loans secured cm policies below 0A per cent. Complaints have been made to the Government by policyholders regarding the action of such cb'jnpanies." -f , V

Mr. Forbes stated that it was not the intention of the Government, when-the legislation was-passed, that life policies should be treated as chattels, the higher .minimum rate. of chattel mortgages being intended to apply only to mortgages of such things as stock, furniture and other tangible articles. He added that, while not agreeing withthe legal interpretation placed- on the Act by the companies in question, the Government realised it would bo.unfair to leave it to individual policy-holders; to challenge in the courts tl(o action: taken bytho companies and, accordingly,' it was proposed at the forthcoming, session to introduce legislation declaring that the word chattels as used in the Act did not include, and had never in- ; eluded, a life policy. - , ; . •