Call to clean up KiwiSaver sales

KiwiSaver providers have been warned about using standover tactics to stop people from changing schemes after complaints were made to the Government's superannuation watchdog.

Government Actuary David Benison, who is in charge of monitoring all KiwiSaver schemes, has written to providers telling them to tidy up their sales and administrative practices or face penalties.

Mr Benison said he had received anecdotal evidence pointing to commission sales people who were using standover tactics and "gross misrepresentations" to try to retain or twist business in their favour.

"It is only anecdotal at this stage. But basically we are saying "get your act together", he told the Herald.

Mr Benison said people had a right to change schemes if they wanted to without being harassed to stay.

"They should stick to their guns."

Last month a stoush emerged between KiwiSaver providers after a commission salesman promoting Fidelity Life's scheme sent out a promotional document claiming competitors ASB and ANZ were "losing" investors' money.

Fidelity said the document was designed only as an internal memo and the salesman had gone outside his authority by sending it to members of the public and would be reprimanded.

The Securities Commission is also investigating illegal door-to-door selling of KiwiSaver after it received complaints from the public through the Inland Revenue Department.

Mr Benison said competition appeared to be heating up in the KiwiSaver transfer market now that the initial focus on sign-ups had passed.

He also warned providers about a lag in the transfers. KiwiSaver providers have 35 working days to transfer a person's account.

"It has come to my attention that a number of providers may have quite significant backlogs of transfers to process and that the 35-day turnaround is not being achieved," he said in the letter.

Mr Benison believed the problem was a "hiccup" associated with it being early days in the transfer process but said it was concerning because it could have a dramatic impact on the KiwiSaver experience. It was also possible the delays were linked to the old provider using pressure to keep the saver with them, he said.

Mr Benison warned providers if he received complaints that were substantiated they could face an investigation or he could be forced to use his powers under the KiwiSaver Act, which include getting a court order to close down the scheme.

"I therefore trust that all KiwiSaver providers will look to review and, if necessary, tidy up both their sales and administrative practices in relation to their handling of transferring members' personal details and account balances in a manner which fully complies with the law."

Greg McAllister, acting head of ASB investments, and one of the largest KiwiSaver providers, said he had complained to Mr Benison after some unexplainable delays in the transfer of some KiwiSaver accounts.

"Coming to terms with the transfer process has not been without problems," he said. But he believed there were also a small number of providers who appeared to be purposely blocking transfers to try to keep members.