KiwiSaver managers will need license to invest

KiwiSaver fund managers will have to have a license to operate by December 1. Photo/Steven McNicholl.

More than $100 billion worth of Kiwis' hard-earned savings - including the $30 billion in KiwiSaver are set to gain greater protection through a new licensing regime.

Investment watchdog the Financial Markets Authority is putting pressure on managers of pooled investment schemes like KiwiSaver, cash PIEs, property syndicates and forestry syndicates to meet new requirements ahead of a December 1 deadline set under the Financial Markets Conduct Act.

Up until now managers of these schemes have had a low bar to operate - only needing to be registered on the Financial Service Providers Register, although KiwiSaver providers must meet other requirements and are also overseen by supervisors which are already licensed.

That has meant anyone could call themselves a fund manager without needing to prove what kind of experience or skills they have or that they have the right processes in place to ensure investors' money isn't put at undue risk.

FMA spokesman Andrew Park said it estimated there were around 75 managers of which 30 managed KiwiSaver schemes.

So far just six KiwiSaver managers have obtained a license and in total 16 managers of managed investment schemes had got a license.

Park said the licensing process was not designed to put people out of business.

Licensing is about moving up the threshold.

Andrew Park

New Zealand is currently an international outlier by not having a licensed fund manager regime.

Park said the authority was confident all KiwiSaver managers would get a license in time and almost all had already been in touch with it over the new regime.

He said the authority was more concerned about the "fringe areas" where some managers may not believe they need to be licensed.

FMA chief executive Rob Everett said licensing was a chance to instill confidence in the industry by helping to manage provider conduct and monitor major risks across the sector.

"The big change in the licensing framework is our continuous and ongoing role in supervising the conduct of providers to ensure they are putting the interests of their customers at the centre of their operations."

After December 1 anyone offered the chance to put money into a pooled investment scheme will be able to check if the manager has a license through the FMA's website.

If they are not licensed the manager should be reported to the FMA.

After December 1 anyone not meeting their license requirements could face a tough questions by the regulator followed up by more stringent measures if they don't come up to standard.

Q&A
What is a managed investment scheme?
Any investment where your money is pooled together with other people's money to invest into shares, fixed interest investments, property, or forestry. It includes KiwiSaver schemes.
How much money do Kiwis have in managed investment schemes?
Around $100 billion of which $30 billion is KiwiSaver money.
How many managers are there?
About 75 of which 30 are KiwiSaver managers