New rules give KiwiSaver managers clear duties to investors

KiwiSaver fund managers are to have a direct duty of care to their investors and will have to provide regular updates on their investment performance, fees and asset allocation under a new regime announced by the Government last night.

In a speech to the New Zealand Herald INFINZ Awards, Commerce Minister Simon Power said it had become clear that the regulatory regime around KiwiSaver left "much to be desired".

"That is unacceptable for a product that has well over one million New Zealanders investing nearly $5 billion in it."

Power said the changes would ensure fund managers and trustees had clear duties and obligations to investors.

Under the new legislation fund managers will become the issuer with primary responsibility for the accuracy of prospectuses and investment statements, and will be given a direct duty of care to investors.

"Right now, fund managers have few direct duties to investors and it's difficult to hold them to account, despite the fact that they are responsible for the investments of the scheme," said Power.

Trustees will also have a duty of care to investors and will be in charge of supervising fund managers. They will also be subject to a new supervisory regime currently going through Parliament.

A new super-regulator, the Financial Markets Authority, will monitor trustees.

Every fund will also have to provide regular information to the public and regulators regarding their performance, fees and the allocation of their assets, aligning them with the same reporting standards that the six default schemes currently have to meet.

"If investors are to have confidence in KiwiSaver then they need to be able to rely on information about fund performance without wondering if the figures have somehow been doctored," Power said.

He said the Government would consult with the industry before specifying exactly what would need to be disclosed and how it would be calculated.

Both fund managers and trustees would be held to account by regulators if there was any wrongdoing, he said.

"There must be sufficient checks and balances to ensure that KiwiSaver providers act with integrity and honesty when investing on behalf of you and I."