In a second advertisement on its website called “Estefania’s story”, which ran for around 13 months, Pathfinder represented that its funds didn’t invest in companies involved in fossil fuels or animal testing.
However, the FMA said Pathfinder’s funds were invested in five companies involved in animal testing for pharmaceutical purposes and one company using fossil fuels to generate electricity.
Although Pathfinder’s ethical investment policy generally excluded investments in companies deriving more than 5% of revenues from fossil fuels and animal testing, those companies had been exempted in line with Pathfinder’s policy criteria.
That made the promotions misleading in the FMA’s view.
FMA executive director of response and enforcement Louise Unger said there was a material disparity between what was said in the advertisements and the actual position.
“Pathfinder should have qualified the advertisements by including prominent information about the exceptions it had granted as permitted by its ethical investment policy.
“The FMA’s primary concern is the harm caused by investors being misled about the investments made by Pathfinders’ KiwiSaver funds,” Unger said.
The FMA was satisfied Pathfinders’ conduct was a material departure from the fair dealing requirements of the Financial Markets Conduct Act and didn’t follow the FMA’s guide on advertising financial products.
“KiwiSaver is vitally important to the wellbeing of New Zealanders,” the authority said.
“Misleading statements about a fund’s ethical investment policy have the potential to result in consumers investing in a fund that is inconsistent with their values and to cause damage to investor confidence in KiwiSaver.”
The authority acknowledged Pathfinder’s cooperation during its investigation and its decision to remove the advertisements when the FMA began its inquiries.
-BusinessDesk
