Pros and cons of moratoria espoused to select committee

PricewaterhouseCoopers' John Fisk, who is part of the accounting firm's recovery business, questioned the benefits of finance companies going into moratoria at a select committee inquiry into the sector. Fisk told Parliament's Commerce Committee that investors did not necessarily receive the best advice when voting on whether to send a finance company into moratorium, with forecast recoveries not reflecting the risk of the environment.

"It's extremely difficult to assess - my feeling is that management outlook has generally been optimistic," Fisk told the committee. "The management is not necessarily the best team to actually recover loans."

He said finance companies often operated a "flawed model" and while they could make gains during strong periods of economic growth, they often collapsed in times of strife.

When asked about whether investors had enough information to make an informed decision, he said it was "very difficult for investors to really get a handle on" what was being put forward to them, and said they often "made decisions on an emotional basis."