Financial Markets Authority to give KiwiSavers top billing for protection against misconduct

Financial Markets Authority to give KiwiSavers top billing for protection against misconduct

KiwiSavers have been promised top priority by the new financial markets regulator as part of enforcement efforts aimed at protecting open and transparent markets in New  Zealand.

The Financial Markets Authority, which unveiled its new Enforcement Policy Monday, described the retirement scheme as a "fundamental plank of New Zealand's retirement savings strategy and said protecting its integrity was an "obvious priority" because of the number of members - tipped to reach 1.9 million by the end of the year.

FMA chairman Simon Allen said the FMA would focus its efforts on areas where misconduct presented  the biggest risk.

For KiwiSaver, that meant sales and distribution practices  would be under the microscope.

“We...will act decisively against any evidence of misconduct in this part of the market,” Allen said.

Earlier this year, the authority took action against a KiwiSaver salesman who was caught selling KiwiSaver schemes in exchange for cash outside of Working For Families offices.

The provider at the center of the controversy, SuperLife, was ordered to overhaul its sales practices. (See Amanda Morrall's article here for details).

Allen said the FMA's other priorities included compliance with new licensing regimes and monitoring of trading on registered securities exchanges. The financial advisory sector in particular would be closely monitored.

Allen said the FMA would be judiciously and selective in cases it decided to investigate so as to maximise efficiencies.

For example, a case might be set aside where:

·         Enforcement would not be justified in the public interest;

·         There are opportunities for more effective intervention – such as referral to the Serious Fraud Office;

·         The breach is a one-off, isolated case, or involves minor events relating to technical error or similar issues;

·         The breach can be better resolved directly by disputes resolution schemes or by contract between private parties.

For more on the Enforcement Policy see Gareth Vaughan's story here.


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