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Financial Markets Authority to start 'theme-based' monitoring of KiwiSaver schemes as part of regulatory sweep on industry

Posted in KiwiSaver

KiwiSaver providers will soon be subject to greater scrutiny as part of a regulatory crackdown announced by the Financial Market Authority (FMA).

The FMA is beginning a rigorous monitoring programme of KiwiSaver offer documents (investment statements), provider's websites and other materials distributed to members to ensure industry compliance with rules around the national savings scheme.

According to a note issued by law firm Minter Ellison Rudd Watts, the FMA plans to begin its investigation by taking a cross section of schemes and applying a theme-based evaluation to their business practises.

Specific areas of focus will include:

  • Self-assessment risk profiles found in many investment statements and other advertising materials that aim to assist investors in making appropriate investment decisions
  • Clear and concise disclosure of all fees and expenses
  • The description of investment funds and consistency with the scheme’s mandate
  • Consistent and appropriate application of applicable accounting standards.

The FMA is also undertaking separate work on:

  • the way in which scheme assets are invested, and how trustees monitor the activities of managers in this key risk area; and
  • the registration and administration of KiwiSaver schemes and monitoring compliance of and enforcing the relevant sections of the KiwiSaver Act 2006. Future work will involve assessing FMA’s guidance notes on the sale and distribution of KiwiSaver, KiwiSaver performance fees, and effective disclosure in offer documents.

According to Minter Ellison Rudd Watts, providers in breach of regulations will be sanctioned and any potential infractions communicated to the investing public. 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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5 Comments

I'm all for the FMA looking

I'm all for the FMA looking out for consumers, Kiwisaver is the least of their worries. How about looking into individuals raising lots of public money and setting up Ponzi schemes, how on earth did the FMA not know about that guy when he had raised something like $400 million?

I understood the FMA were

I understood the FMA were already in the process of making investigations into Ross Asset Management prior to it becoming public knowledge and splashed all over the papers. 
There have been several advisers monitored so far as part of the first wave of monitoring/visits and the results/findings of these can be found here.
https://www.fma.govt.nz/media/916995/afa_interim_monitoring_report_june_...

 
 

I hope they maintain balance

I hope they maintain balance here, it is not in the countries long term interests to make compliance paperwork so onerous as to drive out everyone except the huge fund managers and so destroy all competition and innovation.

Totally agree. The amount of

Totally agree. The amount of paperwork given to clients has increased but I think this is more out of advisers not fully understanding / appreciating what is required or expected under the various code standards and legislation.  
 

Which leads to a safe harbour

Which leads to a safe harbour approach.