Election 2023: National wants to give KiwiSaver investors more choice

National Party leader Christopher Luxon wants KiwiSaver members to be able to invest through up to two or three providers. Photo / Jed Bradley

The National Party is campaigning on allowing KiwiSaver members to invest through up to two or three providers.

Currently, KiwiSaver members can only invest through one provider, like ANZ, Milford or Simplicity for example.

Usually this means members can split their investments across different funds (i.e. conservative, balanced and growth) offered by the same provider.

There are a few providers, like AMP and InvestNow, that give members the opportunity to invest in funds offered by a selection of providers that they have relationships with.

Nonetheless, National wants to give all KiwiSaver members the option of diversifying their risk by investing through up to two or three providers.

National’s Commerce and Consumer Affairs spokesperson Andrew Bayly said the current rules limit investors’ choices and potential returns.

“As the sector grows and matures, some KiwiSaver providers are looking to diversify their investments into different classes of assets – such as start-ups and build-to-rent investments,” Bayly said.

“However, under the current settings, savers who want to access these new investments are forced to shift all their savings to that provider – limiting choice and competition…

“Increasing flexibility and choice for KiwiSavers to allocate their savings across multiple providers will encourage innovation, and higher potential returns over their lifetime.”

Bayly also argued changing the rules would improve competition, which could put downward pressure on fees charged by KiwiSaver providers.

Separately, Bayly reiterated National would loosen the law that sets out the checks, which lenders need to do to ensure borrowers can afford to repay the debt.

The Government has been criticised (often by those with vested interests) for tightening the Credit Contracts and Consumer Finance Act (CCCFA) too much in a bid to protect vulnerable people from predatory lending.

The rules were relaxed in both May this year and July last year to address the “unintended impacts” of changes that took effect in December 2021.

Last week Commerce and Consumer Affairs Minister Duncan Webb said he intended to do a wider review of the CCCFA.

He wanted to recalibrate the rules, but wouldn’t go so far as to say he wanted them watered down.

Bayly argued the CCCFA had “stifled access to credit and resulted in borrowers being subjected to highly intrusive questioning from their bank, with every purchase, membership, or subscription up for scrutiny”.

“Someone looking to start a business by extending their mortgage shouldn’t have to tell their bank which brand of cat food they buy or justify their Netflix subscription,” he said.

“National will maintain tight restrictions on predatory lenders, but significantly reduce the scope of Labour’s other changes to the CCCFA.”

Bayly also said National would repeal the Conduct of Financial Institutions Act, which will introduce a regulatory regime in March 2025, aimed at ensuring financial institutions treat their customers fairly.

The regime has been years in the making. It comes off the back of conduct and culture reviews the Financial Markets Authority and Reserve Bank did of the banking and life insurance sectors in 2018 and 2019, following the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Bayly argued the law will “impose additional burdens on lenders, making credit more expensive and harder to obtain, even for basic services such as overdrafts and mortgages”.

Jenée Tibshraeny is the Herald’s Wellington Business Editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.