New Zealand’s financial landscape continues to evolve, with changes to regulation, the introduction of the Depositor Compensation Scheme, and increasing discussion about competition within the financial sector.

In a recent wide-ranging interview, Brent King, Managing Director of General Finance, discusses how General Finance operates, what recent regulatory developments mean for depositors and borrowers, and some of the wider opportunities and challenges facing the New Zealand economy.

How General Finance Works

General Finance is a New Zealand-owned finance company that accepts investments from depositors and provides lending, with a particular focus on short-term property finance.

The business model is straightforward: funds received from investors are used to support lending opportunities that meet General Finance’s credit and security requirements.

For borrowers, this includes specialist lending solutions such as short-term mortgages and bridging finance, which can be useful where traditional bank lending may not suit the borrower’s circumstances or timeframe.

For investors, General Finance offers a range of term investment options with different terms and interest rates.

The Depositor Compensation Scheme

One of the significant recent developments for New Zealand depositors is the introduction of the Depositor Compensation Scheme (DCS).

The DCS provides protection of up to $100,000 per eligible depositor, per licensed deposit taker, if that deposit taker fails.

In the interview, Brent discusses what the scheme means for depositors and why it represents an important change to New Zealand’s financial system.

While the DCS provides additional protection for eligible deposits, investors should still consider factors such as interest rates, investment terms, the financial position of the deposit taker and its credit rating before deciding where to invest.

Why Do Deposit Rates Differ?

Interest rates offered by deposit takers can vary considerably.

Brent explains some of the reasons why smaller or specialist deposit takers may offer different rates compared with larger financial institutions.

The interest rate is only one consideration when choosing an investment. Investors should understand the organisation they are investing with, the applicable terms and conditions, and the risks associated with the investment.

General Finance publishes information about its deposit rates, credit rating, Product Disclosure Statement and financial position to help investors make informed decisions.

Short-Term Property and Bridging Finance

The interview also explores General Finance’s lending activities and the role specialist lenders can play in New Zealand’s property finance market.

Not every property transaction fits neatly within traditional long-term bank lending.

A borrower may need finance to bridge the period between purchasing one property and selling another, complete a project, refinance an existing facility or take advantage of an opportunity where funding is required within a relatively short timeframe.

General Finance specialises in assessing these types of lending opportunities and providing short-term property finance tailored to individual circumstances, subject to its lending criteria.

A Changing Financial Sector

Beyond General Finance itself, the discussion looks at some of the broader changes taking place across New Zealand’s financial sector.

Topics include potential changes to the way licensed deposit takers are described, competition within the financial system, KiwiSaver, investment in New Zealand businesses, entrepreneurship and the regulatory environment.

Brent also discusses the importance of encouraging productive investment within New Zealand and the role that access to capital can play in supporting businesses, property development and wider economic activity.

Looking at New Zealand’s Economic Future

The conversation extends beyond deposits and lending to consider New Zealand’s longer-term economic outlook.

Infrastructure, productivity, exports, entrepreneurship and investment all contribute to the country’s ability to grow.

Brent shares his perspective on where New Zealand can improve and why creating an environment that supports investment and enterprise is important for the country’s future prosperity.

Watch the Full Interview

For a more detailed discussion, watch the full interview with Brent King, Managing Director of General Finance, covering:

• How General Finance attracts deposits and provides lending
• The Depositor Compensation Scheme
• Deposit rates and what investors should consider
• Short-term mortgages and bridging finance
• Financial regulation and competition
• KiwiSaver and investment in New Zealand businesses
• Entrepreneurship and economic growth
• Infrastructure, productivity and exports
• The outlook for New Zealand’s economy

Important information: This article and the accompanying video contain general information only and do not constitute financial advice. Before investing, you should review the relevant Product Disclosure Statement and consider obtaining independent financial advice appropriate to your circumstances.