Government announces KiwiSaver watchdog

Commerce Minister Simon Power has tonight announced changes to KiwiSaver regulation that he says will improve the governance and management of KiwiSaver schemes.

The changes, announced at the Institute of Financial Professionals New Zealand(Infinz)  annual awards in Auckland, follows the recent controversy of Huljich KiwiSaver’s disclosure of certain transactions.

The changes will place duties on fund managers of retail KiwiSaver schemes to act in the best interests of investors, and make them primarily responsible for the accuracy of their prospectus and investment statement.

“Currently KiwiSaver trustees are technically the 'issuer' of the KiwiSaver scheme for the purpose of the Securities Act. Fund managers have few direct duties to investors, and significantly less liability for misleading statements than the trustee,” Mr Power said.

The changes will ensure trustees are responsible for supervising managers and making sure they comply with trust deeds and their other responsibilities.

Trustees will also be supervised by the Financial Markets Authority, which will become the new securities market regulator.

Managers will have to regularly provide ongoing information to the public and regulators regarding their performance, their fees, and what they have invested in.

“It's become clear that the regulatory regime around KiwiSaver, in which more than one million New Zealanders have invested nearly $5 billion, needs improvement,” Mr Power said.

“Mum and dad investors need to be certain that KiwiSaver is well governed and that those managing their hard-earned savings will be held accountable if there is wrong-doing.”

He said it’s important the public can rely on the information published by KiwiSaver funds without wondering if the figures have been doctored in some way.

“This sort of information is provided to the regulator for the six default funds, and I can see no reason why non-default funds should be subject to different reporting requirements.

“KiwiSaver does not have a Government guarantee, but investors are entitled to expect that it will be well regulated and transparent. These changes will ensure that.”