Improvements to KiwiSaver regulation introduced

A bill to improve the governance and management of retail KiwiSaver schemes was introduced to Parliament today by Commerce Minister Simon Power.

Mr Power says the regulatory regime around KiwiSaver needs to be robust for the 1.5 million people who have more than $6 billion in the scheme.

“The Government has fast-tracked this work because it’s become increasingly evident that the governance and oversight of retail KiwiSaver schemes could be better,” Mr Power says.

The changes are included in the Financial Markets (Regulators and KiwiSaver) Bill which also formally establishes the new super regulator, the Financial Markets Authority.

“The changes will ensure that fund managers act in the best interests of investors by making them primarily responsible for the accuracy of their prospectus, investment statement, and advertisements.

“Currently, KiwiSaver trustees are technically the ‘issuer’ of the KiwiSaver scheme under the Securities Act. Fund managers have few direct duties to investors, and significantly less liability for misleading statements than the trustee."

The changes will also require trustees to be responsible for supervising managers and making sure they comply with trust deeds and their other responsibilities.

This will allow KiwiSaver trustees to come under the proposed Securities Trustees and Statutory Supervisors Bill, which is before Parliament, and they will need to be licensed by the Financial Markets Authority.

The bill also allows for regulations to be drafted requiring periodic reporting by retail funds on fees, returns, and asset allocations, as the six default funds currently do.

“We have undertaken extensive, targeted consultation with industry to develop a discussion document setting out a framework for periodic reporting by funds, and we’ll be seeking feedback on this shortly.

“Though KiwiSaver is not Government guaranteed, investors are entitled to a level of information that enables them to easily compare schemes and make informed choices and these changes will ensure that happens.”

At this stage, the changes will not apply to existing non-retail KiwiSaver schemes - that is, employer-based and other vocational-based schemes – or non-KiwiSaver superannuation schemes.

ENDS

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