Guidance from the Securities Commission? Yeah Right

Yes, I called the Securities Commission’s recent paper on KiwiSaver distribution and disclosure “pathetic”. I’m not about to withdraw that comment – which I’ll elaborate on below. And I certainly didn’t disagree with the essence of the “Guidance Note”.

In fact if you strip out 2,000-odd words from the document, translate it into plain English, then you’ve got a pretty sensible set of don’ts and dos for KiwiSaver providers: 

• don’t tell lies
• don’t distort performance returns
• don’t trick the public into joining up
• don’t be sneaky about investment practices
• and scheme Trustees do your jobs properly

So why do I think Jane Diplock’s latest contribution is pathetic?

Instead of sending KiwiSaver providers warnings about their legal obligations, she has a far more important issue on her hands with KiwiSaver and she should be dealing to it. There has been a case of serious wrongdoing by a KiwiSaver provider and this is not the time to be making gentle reminders to the rest of the industry.

She should be demonstrating that she is not going to let this sector get away on her like she did the finance companies, and deal swiftly and comprehensively with the miscreant. Any KiwiSaver provider involved in a deliberate abuse of investor trust should be brought to book swiftly and publicly. That is the best way to demonstrate to the public that New Zealand financial market supervision here has at last been reformed.

There is a world of difference between KiwiSaver providers ticking all the boxes on their compliance obligations – which is what Diplock’s reminder is about – and dealing with a deliberate confidence trick pulled on investors by a provider.

The Securities Commission is overdue to show that it is itself turning into a proper enforcement agency. If this is beyond Jane Diplock, which many of us think it is, then she needs to moved on and somebody who can be respected and relied upon to protect investors’ rights, appointed. The Huljich confidence trick is the first deliberate effort in the KiwSaver space to mislead investors. That company and its directors need to be declared unfit to make financial offers to the public.