Information about debts can be found in the Notes to the financial statements section of the prospectus

^A Overdue loans that may not be recoverable. These could be over 90 days overdue (the number of days differs among companies).

^B Loans that are likely to remain uncollectible and will be written off.

^C Transactions between a company and others (companies or individuals) that have personal or business links with the company or its management.

^D An independent opinion of a company’s ability to meet its financial commitments in full and on time.

Reduce your risk

Read the fine print

Ploughing through a huge prospectus can be daunting, but it’s important you do some research before investing your hard-earned cash.

Here’s where to find the information you’ll need:

Finding out where your money is going

To find out where your money is going look for a section in the prospectus called something like:

Concentration of credit exposure by industry
Description of activities of the company.
Risks specific to the company's business

These sections tell you what industry or industries the finance company operates in. That is, what type of lending it does.

This information must be in the investment statement - look for the What are my risks? section. See What are the risks? for more about why this is important.

Bad debts

Information about debts can be found in the Notes to the financial statements section of the prospectus.

A prospectus should list three types of bad debts:

impaired assets^A
past due assets
bad and doubtful debts^B

See What are the risks? for more.

Related-party lending

The Notes to the financial statements section of the prospectus is where you can find information on what's called related-party lending.^C

See What are the risks? for more about why this is important.

Company searches

If a company does not have a credit rating^D and is not listed on the stock exchange, they are only required to file annual reports and prospectuses.

Investors researching these companies should check the companies office website to review how frequently these companies report data. The longer the time between the reporting and balance dates, the less you know about the company.

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Important

Like you, we can't predict the future - which means we can't guarantee the performance of any company or investment. Consumer NZ does not endorse any specific company, scheme or investment. ConsumerSaver is a good starting point - but, before you commit, we strongly suggest you seek independent financial advice. See our full disclaimer.