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01 March 2022

Simplicity

March 2022

FMA directed Simplicity NZ Limited to remove advertising materials that breached fair dealing provisions, and ensure future advertising is compliant.

The FMA direction relates to Simplicity’s ‘All Greys’ advertising campaign, which included the statement, “get out of the game when you want to, retire with up to 20% more than the average KiwiSaver plan”, and encouraged people to switch their KiwiSaver fund to Simplicity. The FMA considered the statement was unsubstantiated and likely to mislead or deceive under the Financial Markets Conduct Act 2013 (FMC Act).

The advertising campaign appeared on a variety of media channels from August to October 2021, including TV channels, Facebook, YouTube, billboards, internet display banners, and Simplicity’s website. The statement appeared prominently in the materials.

The FMA reviewed the advertising campaign and determined, that when viewed as a whole, the campaign would likely mislead consumers to believe incorrectly that joining Simplicity would give them a retirement balance 20% greater than the average. The FMA determination was based on:

  • the claim that consumers would be ‘up to 20% better off’ with Simplicity was based on the present value of 45 years of the benefit of paying Simplicity’s fees relative to a higher average KiwiSaver fee. The FMA concluded that assumptions relied on, in making the claim, were not reasonable, in particular the assumption of no changes to fees over a 45-year period was unrealistic, especially given significant recent changes in KiwiSaver fees, as was the assumption of all other factors being equal, such as investment returns.
  • the assumptions underpinning the advertising claim – including the core assumption about the impact of paying lower fees – were not prominently disclosed in the advertising materials, so consumers were unable to examine or query those assumptions even if they had been aware of them.