During client sessions and in statements of advice, one-year and annualised returns figures were presented in connection with the Aurora funds.
The FMA said those figures were based on historical returns of underlying, third-party funds into which the Aurora funds would be invested, once the Aurora funds launched.
“The returns figures implied that the Aurora funds had an established history which they did not,” the authority added.
“Fine print below the returns figures was not sufficiently clear, or prominent, for clients to understand the returns presented had not been achieved by the Aurora funds, but by the underlying funds.”
The FMA said Aurora Financial did not update or replace returns figures with the actual returns Aurora funds produced once they had launched and short-term return data became available.
Aurora Financial stopped using the returns figures in May 2022.
Aurora Financial gave clients the impression the Aurora funds were delivering higher returns than they actually were. In the period the returns figures were used, 2474 Aurora Financial clients joined the Aurora funds of the 4051 who received the advice.
The FMA said it was satisfied Aurora Financial’s conduct was misleading or likely to mislead, and resulted in it making false or misleading representations.
Aurora Financial Group chief executive Simon Rolland today said the company accepted the FMA’s decision.
Rolland said the company should have been clearer that the genuine historical returns in the written statement of advice were achieved by the underlying funds, and should have updated the return information in a timelier manner.
“I can confirm that the returns information from the underlying funds used to illustrate potential investment returns was accurate, and the methodology used to calculate them was robust.”
He said the rebuke related to a statement of advice available to clients between September 2021 and May 2022.
“We take our compliance responsibilities extremely seriously and we respect the role of the FMA in regulating our financial markets to ensure we have a well-functioning financial system,” he added.
“We have always had a supportive and open relationship with the FMA and will continue to do so.”
On its website, the company described itself as working with New Zealand’s trusted financial product providers to deliver customers tailored financial solutions.
The FMA’s Paul Gregory said investors and advice clients should expect to receive accurate and clear information to help make informed decisions about financial products.
“This is especially the case where potential clients are being asked to make decisions to acquire a product,” Gregory said.
“Aurora Financial’s misleading conduct and representations in statements of advice, presented to clients by their advisers are a breach of trust and could erode the public’s confidence in financial advice providers.”
Gregory said any affected clients with concerns about the matter should contact their adviser or the Aurora KiwiSaver Scheme.
