Supplementary Document to the Product Disclosure Statement
This is a supplementary document to the NZCU Employees Product Disclosure Statement dated 16 November 2016 relating to an offer of Shares issued by New Zealand Employees Credit Union.
This supplementary document supplements Section 6 – ‘Specific risk of investing’ of the Product Disclosure Statement dated 16 November 2016 relating to an offer of Shares issued by New Zealand Employees Credit Union (PDS) by inserting a new sub-section 6.7.
This supplementary document is to be read together with that Product Disclosure Statement. No other supplementary documents have currently been lodged.
6.7 Service Providers Risk
Service providers risk can potentially have a significant impact on NZECU’s profitability or solvency. This type of risk might principally arise in relation to NZECU’s main service provider Co-Op Money NZ.
NZECU not only receives its computer system from Co-Op Money NZ (see IT System Risk under 6.5) but also banking and card services, Central Banking facility and IT facilities.
The Registrar of Friendly Societies and Credit Unions (Registrar) has recently formed the view that the current Rules of Co-Op Money NZ do not comply with the requirements of s.143 of the FSCU Act. Consequently, there is a risk that if Co-op Money NZ is restricted from providing services to Associate Members and third party non-members, this may cause financial difficulties for Co-op Money NZ which could affect an increase the cost of the services provided to its member credit unions with a flow-on effect to Members.
Likelihood of Impact
Co-Op Money NZ has advised member credit unions that it has appealed the Registrar’s decision to the High Court. Co-Op Money NZ has advised that the basis for this appeal is that they believe the Registrar’s decision is wrong in law. The chances of success or whether the appeal will prevent negative consequences to Co-Op Money NZ in the meantime is unknown. NZECU needs this information to be able to assess the likelihood of an impact on it and its Members.
Nature of Impact
Until Co-Op Money NZ advises its member credit unions including NZECU of the consequences for Co-Op Money NZ of such a ruling, both until the appeal is determined and if the appeal is unsuccessful NZECU is unable to assess the nature of the impact on NZECU.
Potential Magnitude of Impact
NZECU has asked Co-Op Money NZ to advise it of any possible service cost increases and Co-Op Money NZ’s financial position of such a decision both until the appeal is determined and if the appeal is unsuccessful. NZECU needs this information to be able to assess the potential magnitude of the impact on NZECU.