A bill to improve the governance and management of retail KiwiSaver schemes was introduced to Parliament today.
The newly announced changes are included in the Financial Markets (Regulators and KiwiSaver) Bill, which also formally establishes the new super regulator, the Financial Markets Authority.
They will put the onus on fund managers to act in the best interests of investors by making them primarily responsible for the accuracy of their prospectus, investments statement and advertisements.
Currently KiwiSaver trustees are technically the issuer of the KiwiSaver scheme under the Securities Act, so that 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.
Commerce Minister Simon Power said the regulatory regime for KiwiSaver needed to be “robust” for the 1.5 million people who have a collective $6 billion invested 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 said.
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.
Calls for changes to KiwiSaver regulation were made after controversy followed former Huljich KiwiSaver managing director Peter Huljich’s admission he used his own money to top up investor funds.
NBR staff
Tue, 14 Sep 2010