The Financial Professional Services Trading Advice Transparency Bill, which was drawn from the ballot last week, will
remove an inherent conflict of interest that exists for those providing advice on the trading viability of troubled
companies, National’s Barbara Kuriger says.
“Businesspeople, creditors and investors need to be assured any perception that an element of self-interest might exist
for those providing professional advice about the viability or future of businesses, such as accounting firms, is
removed.
“When market conditions are difficult, and a business is under pressure, all parties with money at stake will be
concerned to ensure their positions are protected.
“Often professional financial advisors, such as accounting firms, are called in by creditors like banks, trustees or
business owners seeking advice on whether the company can manage its way through choppy waters.
“Sometimes it is the view of these advisors that the best course of action is to wind the company up, a process which
can take a number of years – and be a significant source of fees for the appointed receiver – as financial positions are
unwound and the business’s assets are sold.
“The Financial Professional Services Trading Advice Transparency Bill, which amends the Companies Act and the
Receiverships Act, makes it clear to individuals and financial services firms that they can give the advice that sees a
company wound up, but they can’t then earn fees over the ensuing months or years winding it up.
“While conflicts of interest and threats to objectivity are covered under codes of ethics for the financial services
sector, this sort of self-regulation is inadequate, and absolute removal of doubt to give everyone confidence in the
process is required by a beefing up of the law.
“What we’re talking about here is the often fraught process of assisted business death.
“Everyone involved, but especially business owners and directors, need to know all options for a company’s future will
be professionally and dispassionately explored.
“I’m saying to professional financial advisory firms, you can give the lethal injection or be the undertaker, but you
can’t do both.”