Consumer affairs minister Paul Goldsmith, New Zealand Herald file photo.
Consumer affairs minister Paul Goldsmith, New Zealand Herald file photo.
The government's announcement that KiwiSaver providers have until 2018 to start providing transparent information about all the fees they charge is a "shameful" demonstration of the lobbying power of New Zealand's banks, the chief executive of start-up, low-fees provider Simplicity, Sam Stubbs, says.
Consumer Affairs Minister Paul Goldsmith announced thestart date today, saying "some providers have indicated they need to make IT system changes and will not be able to provide a dollar figure for fees by next year".
However, Stubbs scoffed at that, saying the information was already provided to the Sorted website and could be calculated by people who knew how to do so, "but somehow it's too hard to tell clients directly".
"It's within the government's power to insist on that information", which the KiwiSaver schemes run by the ASB and Kiwibank already provided, Stubbs said. "The government is assisting the banks in keeping people in the banks' schemes" although the year's grace was no more than "delaying the inevitable".
The new regulations will require that full dollar fee amounts will be required as part of the annual statement sent to KiwiSaver members. At present, management and performance fees can be split up and provided in a variety of formats.
"Many people will think they are they paying $30 when they are actually something more like $360 (in annual fees)," said Stubbs. "That's just wrong."
He said Simplicity, which launched in September, has around 2700 members and some $75 million in funds under management, putting it well ahead of targets for its first year in operation.
"Nearly all the business is coming from the big banks," he said, claiming the average balance of funds transferring to Simplicity was around $30,000, indicating it was proving attractive to people who had been in a KiwiSaver scheme for a few years.
Simplicity offers low fees by using multi-national index-tracking fund manager Vanguard who make no effort to pick individual stocks but ride markets in the expectation that they will deliver returns over the long term.
Stubbs was also instrumental in persuading Vanguard to offer a new 'ethical investments' fund that excludes armaments and nuclear power.
