By Amanda Morrall
KiwiSaver provider SuperLife has been told to "overhaul" its sales practices following sanctions by the Financial Markets Authority (FMA) against an unregistered financial adviser who was caught selling schemes to WINZ clients for NZ$10.
FMA chief executive Sean Hughes said the authority "was seriously concerned about a number of matters regarding SuperLife's sales practices, potential non-compliance with the law and apparent poor monitoring of the activities of its sales force.''
The warning applied to SuperLife Limited and SuperLife Trustees Limited.
“From 1 July, FMA will monitor compliance by KiwiSaver providers with their obligations under the Financial Advisers Act. We will not hesitate to take enforcement action against KiwiSaver providers who fail to ensure they comply with their legal requirements,” said Hughes.
The reprimand follows a June 9 notice by the FMA that it had sidelined KiwiSaver salesman Patrick Diack for various misdeeds including not being registered on a public register for all financial advisers operating in New Zealand for selling schemes to members of the public in exchange for money, and without releasing necessary disclosure statements.
Diack was reportedly selling on behalf of several providers and the FMA cancelled the KiwiSaver schemes of some 4,000 people enrolled into the national savings scheme through Diack.
SuperLife was singled out by the FMA for its "apparent failure to properly train its employees and monitor their compliance with the requirements of laws including the Securities Act and Financial Service Providers (Registration and Dispute Resolution) Act."
SuperLife's Michael Chamberlain did not reply to requests by interest.co.nz to elaborate on the incident.
The FMA said, after on-going discussions with SuperLife, it "continues to particularly concerned: about the following:
· failed to ensure that its employees giving advice, such as Mr Diack, are registered on the Financial Service Providers Register as required from 31 March this year
· failed to rigorously train and test its employees in relation to the requirements of law
· failed to adequately monitor its employees’ performance and to performance manage any employees who fell short of the standard required.
Hugh's said the FMA continues to have reservations about SuperLife not complying with law in terms of ensuring its sales people are properly qualified as either Authorised Financial Advisers or QFEs (Qualified Financial Entities). It underscored the following prohibitions for it and other providers:
- door-to-door selling of securities is illegal under the Securities Act
- any form of high pressure, coercive or misleading selling is inappropriate for KiwiSaver schemes
- FMA expects that before an application for membership of a scheme is accepted, the issuer will have taken reasonable steps to satisfy itself the applicant is aware of the nature and extent of the obligations they are incurring and has made the decision freely and on a properly informed basis
- KiwiSaver providers must comply with the Financial Advisers Act and Financial Service Providers (Registration and Dispute Resolution) Act and be aware of their effect on the requirements for distribution of their products.
(Update adds more detail).