Limitations Placed On Interest Rates

Press, Volume XCIX, Issue 29263, 22 July 1960, Page 13

Limitations Placed On Interest Rates

(From Our Parliamentary Reporter} WELLINGTON, July 21. Because of the “excessive” ' rates of interest offered by certain financial institutions, the Government has introduced a limitation on interest rates payable by companies in this category. It will also tighten the legislation concerning advertisements inviting subscriptions for deposits. * The Minister of Finance (Mr Nordmeyer) said in his Budget Speech tonight that : “General concern has been expressed about the high interest rates paid on certain types of deposits and the cohsiderable rise in the rates charged on many hire purchase and other credit transactions.”

“In 1957 the then Minister of Finance decided ‘in view of the continuance of capital issues control’ to release the restrictions on interest rates payable on deposits with building societies and trading companies. The substantial easing of capital issues control which I have announced, together with the excessive rates being paid on some deposits, make it necessary to introduce an Interest on Deposits Order specifying maximum interest rates payable on deposits with trading companies and certain other organisations. “This order will be gazetted tonight. The order fixes the maximum rates payable by building societies, investment societies, and trading companies at rates ranging from 2 per cent, for deposits at call to 5 per cent, for deposits repayable in not less than seven years. "Recently there have been cases where private companies, which are not required to publish accounts, have invited unsecured deposits from the public by extravagant press advertising. In other countries, notably Australia and the United Kingdom, legislation has been enacted or is proposed to protect the investing public from misleading advertisements. In order to protect the small investor in New Zealand, the Government intends to introduce legislation during this session providing that any advertisement inviting subscriptions for deposits shall be deemed to be a prospectus under the Companies Act.”