Plain language law

New Zealand law explained for everyone

Local Government Act 2002

Planning, decision-making, and accountability - Borrowing and security - Miscellaneous provisions

122: Disclosure document and loan documents to contain statement that the Crown does not guarantee financial products or loan

You could also call this:

"Government does not guarantee local council financial products or loans, unless stated otherwise."

Illustration for Local Government Act 2002

When a local authority or Watercare Services Limited issues a financial product, they must tell you that the government does not guarantee it, unless the Public Finance Act 1989 says it does. They have to include this information in a document that explains the product, which is called a disclosure document. This document is like a guide that helps you understand what you are buying.

If a local authority or Watercare Services Limited borrows money, they must include a statement in the loan agreement saying that the government does not guarantee the loan. This means that if they cannot pay back the loan, the government will not cover the debt. However, there are some exceptions to this rule, which are explained in the Public Finance Act 1989.

You should be aware that a disclosure document can be a product disclosure statement, as defined in the Financial Markets Conduct Act 2013, or a disclosure document under clause 26 of Schedule 1 of that Act. The local authority or Watercare Services Limited must follow these rules when issuing financial products or borrowing money. This helps to make sure that you have all the information you need to make informed decisions.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM172907.

Topics:
Money and consumer rights > Consumer protectionMoney and consumer rights > Banking and loansGovernment and voting > Local councils
Previous

121: The Crown not liable for debts, or

"The Government does not have to pay debts owed by local councils or water services companies, except in special cases."

Next

123: Outline of Part, or

"Rules for local authorities to follow and manage community services and properties"

Part 6Planning, decision-making, and accountability
Borrowing and security: Miscellaneous provisions

122Disclosure document and loan documents to contain statement that the Crown does not guarantee financial products or loan

  1. If a local authority or Watercare Services Limited is named as the issuer, or is otherwise named with its consent, in a disclosure document, that disclosure document must, unless the financial products being offered under the disclosure document are expressly guaranteed by the Crown under the Public Finance Act 1989, contain a statement that the financial products being offered under the disclosure document are not guaranteed by the Crown.

  2. In subsection (1), disclosure document means a product disclosure statement (within the meaning of section 6(1) of the Financial Markets Conduct Act 2013) or a disclosure document under clause 26 of Schedule 1 of that Act.

  3. If a local authority or Watercare Services Limited enters into any loan agreement or incidental arrangement, that agreement or arrangement must include a statement that the loan or other liability under the incidental arrangement is not guaranteed by the Crown.

  4. Subsection (3) does not apply in relation to liability for any sum of a kind described in section 49 of the Public Finance Act 1989.

Notes
  • Section 122: replaced, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).
  • Section 122(1): amended, on , by section 99 of the Local Government (Water Services Preliminary Arrangements) Act 2024 (2024 No 31).
  • Section 122(3): amended, on , by section 99 of the Local Government (Water Services Preliminary Arrangements) Act 2024 (2024 No 31).