Loophole to be closed

Press, 14 July 1982, Page 35

Loophole to be closed

PA Auckland Government moves • to close loopholes in its freeze on interest rates have been greeted “With resignation by the main finance institutions. The new Interest on Deposits Order. announced bv the Prime Minister (Mr Muldoon) 'yesterday, restricts the payment of interest in advance to increase the yield to investors.

Interest paid or compounded quarterly in arrears would now be the standard, Mr Muldoon said.

Broadlands’ general manager (Mr Terry Haydon) said of the package: “It was not unexpected. As far as we are concerned we have to live within the law.

"What is really happening is that we are being affected in an area where we have been able to compete with higher interest rates being offered by other institutions."

Mr Steve Eltringham, general manager 'of funds and planning at Marac, said: "There is little we can dp about the regulations in light of the present mood of the Prime Minister. We’ll be living with it and examining the regulations closely.’’ But, Marac would - not necessarily stop .paying interest in advance, he said. “It does not preclude us from paying interest in advance: It just means the interest rates will be adjusted. This has been one of our products for the last five or/six years.” Mr Eltringham said the payment of interest in advance offered benefits to investors other than a higher yield. •‘The lady who has an inheritance when her husband dies wants to maintain a steady income to meet costs. It is not just a question of yield."