A KiwiSaver provider which makes investments in accordance with the Islamic principles of the Muslim religion is suing the Financial Markets Authority (FMA).
Amanah Ethical, which claims to have the only KiwiSaver plan that from the outset has been "truly ethical and Shariah-compliant", has written to its members advising it had for some time been experiencing difficulties with the FMA and the patience of its directors has "run out".
The advisory, signed by AmanahNZ KiwiSaver and Amanah Trust Management managing director Brian Henry, a barrister and commercial litigator, said it had this week sued the FMA "for making decisions that affect Amanah without giving Amanah the opportunity to be heard".
"Amanah believes that the FMA has failed on two occasions to treat it according to New Zealand law which requires all decisions by a regulator to comply with the rules of natural justice," Henry wrote.
The directors had sought to resolve the issues with the FMA but "that patience ran out" after a letter was received from the FMA chief executive.
He reassured members their savings were safe and AmanhaNZ and the AmanahKiwisaver were financially sound.
Henry could not be contacted for comment.
A spokesman said the FMA could not comment as the matter was before the court.
In an attached disclosure notice, Henry said a number of allegations had been made against Amanah Ethical that it "totally rejected".
Directors had been accused of putting Shariah law ahead of the Financial Markets Conduct Act, Henry said.
In November 2017 the FMA had determined, without consultation with Amanah, that it had stopped managing the investments.
The FMA had "misinterpreted" a decision by the directors for a period of time last year to temporarily hold current investments and accumulate the further increments of money coming, pending a capital raising by the management company, Henry said.
Amanah had never stopped managing members money, he said.
Amanah had since been prevented from marketing itself and has needed the FMA's
permission to process new applications to join its KiwiSaver plan.
Amanah's website said its ethical mandate restricts investing activities to permitted investments and screens potential investments for prohibited activities including alcohol, tobacco and defence/weapons.