FMA has recently released a report which highlights potential compliance issues for KiwiSaver offer documents in relation to current market practices. Particular reference is made to the changes that will need to be made to these documents in light of FMA's Effective Disclosure Guidance Note issued in June 2012 (which only applied to offer documents issued by continuous issuers after 1 January 2013) and the new KiwiSaver (Periodic Disclosure) Regulations 2013.
Consistency between periodic disclosure statements and offer documents necessary
FMA points out that the new periodic disclosure statements required by the KiwiSaver (Periodic Disclosure) Regulations are "advertisements" for the purposes of the Securities Act 1978 and, therefore, must be consistent with the KiwiSaver scheme's investment statement and prospectus. FMA notes that given the highly prescriptive nature of the periodic disclosure statements, it is likely that for consistency purposes it will be the investment statement and the prospectus that will need to be aligned with the periodic disclosure statement. FMA has highlighted in the report some instances where it considers the additional disclosures required in the periodic disclosure statements may be inconsistent with current disclosures in offer documents. These include instances relating to the disclosure of investment returns, risk disclosures, disclosures of key personnel, and disclosure of performance and fund fees.
Trustee statements in prospectuses
FMA also notes that it is concerned with trustee statements in a number of KiwiSaver schemes. Trustees of non-restricted KiwiSaver schemes are required to make a statement in the scheme's prospectus confirming whether or not in the trustee's opinion the manager of the scheme has complied with the trust deed and the offer of interests in the scheme. However, it is common practice for trustees to add a disclaimer to the effect that the trustee has assumed that the factual information contained in the prospectus and all information given to the trustee by the manager is correct and that the trustee has not carried out an independent check of that information. In FMA's view, trustees should be doing sufficient work to satisfy themselves of the accuracy of the information provided by the manager to make the trustee statement without such a disclaimer.
The "Monitoring of KiwiSaver Offer Documents" report is available here.