Failing FMA approval, KiwiBank would have to resort to plan B: seeking written consent of each member to make the transfer to GMK. Where members don't grant consent they may either elect to choose another KiwiSaver scheme, or if they ignore the consent letter altogether they will be reassigned to one of the six default schemes when the AMP-managed KiwiBank scheme shuts.
From a provider perspective the FMA-way clearly offers the least chance of leaking members during the transfer.
While the FMA has approved several bulk transfers in the past (most notably in the case of Fisher/Huljich mentioned above) there's good reason to suppose KiwiBank might end up implementing plan B.
To gain FMA approval for bulk transfer the receiving KiwiSaver scheme has to offer members broadly similar investment options and not leave them paying higher fees or losing other benefits.
And on the face of it there's quite a gap between the AMP-managed KiwiBank scheme and the GMK option, including:
GMK invests directly into underlying shares, exchange-traded funds, UK listed investment trusts, currencies, cash, fixed income instruments as well as a few managed funds. The AMP-managed scheme invests via several underlying fund managers while also offering "self-managed" individuals to structure their own mix of underlying funds;
The AMP-managed scheme operates a daily unit-pricing model, allowing members to exit and enter at a known unit price on the day of application. GMK runs a proprietary valuation system with monthly entry and exit points ie a member deciding to exit GMK a day after the last valuation will have to wait about 30 days to find out the realised value of their investments a function that may or may not work in their favour.
In its prospectus, KiwiBank says it will write to members outlining the "material differences" between the two schemes once the transfer method has been decided.
As at March 31 this year the (AMP-managed) KiwiBank scheme reported 17,896 members and $84.5 million under management compared to the 57,617 members and $715 million dwelling within GMK.