The Financial Markets Authority is attempting to get two unnamed KiwiSaver issuers which made potentially misleading statements in offer documents to willingly change them.

After reviewing 15 schemes representing 40 per cent of the market with $5 billion under management, the market watchdog contacted "a number of issuers" seeking clarity on some disclosure matters, leading to the reassessment and voluntary improvement of some offer documents, according to its June 17 report on the monitoring of KiwiSaver offer documents.

"FMA is currently in the process of taking action against two issuers due to non-compliance with securities legislation relating to potentially misleading statements in their offer documents," the report said. The regulator did not give details.

An FMA spokesman said the action was at the "compliance" end of its regulatory framework.


"That is, we are trying to get them to willing comply with the changes we want to see made. If FMA is unable to resolve its concerns satisfactorily, and commences legal proceedings, the issuer or issuers will be identified publicly at that time," the spokesman told the Herald yesterday.

Meanwhile, the market watchdog is reviewing scheme disclosure in general to help set out rules for issuers preparing for a new disclosure regime which seeks to standardise reporting of investment returns and fees.

Under the regulations, KiwiSaver providers would have to publish one comprehensive disclosure statement every year, and four smaller, quarterly reports.

The FMA found investment returns are shown using a range of methods, and do not necessarily have internal consistency with the offer documents.

"These inconsistencies can be confusing for investors, even if there are sufficient disclosures to explain the different basis for calculation," the report said.

Risk disclosures were too generic, and needed more explanation of the specific risks to which funds were exposed and how those risks were managed and mitigated.

The watchdog was also unhappy over what it deemed a lack of disclosure about the directors and senior managers of issuers, investment managers and trustees.

- Additional reporting: BusinessDesk