9 June 2011
The Financial Markets Authority is urging investors to be wary of unacceptable sales practices being used in selling some KiwiSaver schemes.
After receiving complaints, FMA has taken steps to stop unregistered KiwiSaver sales representative Patrick Diack from engaging in illegal sales activities. Mr Diack has been a sales representative for several KiwiSaver schemes, most recently operating in the lower North Island.
Mr Diack's sales approaches have included soliciting members of the public outside WINZ offices, offering them money to join KiwiSaver and signing them up to scheme membership without providing them with the Investment Statement - the disclosure document that provides investors with the information they need in order to decide whether to join the Scheme. His actions breached the Securities Act.
FMA Chief Executive Sean Hughes said investors should be wary of any unusual approaches to buy a financial product or join a scheme such as KiwiSaver, and asked people to alert FMA about any such approaches.
"High pressure or coercive sales techniques are inappropriate for KiwiSaver schemes and residential door-to-door selling of any security is prohibited by the Securities Act."
Mr Diack has also failed to comply with the requirement to be registered as a financial services provider under the Financial Service Providers (Registration and Dispute Resolution) Act which came into force on 31 March this year.
Under the new financial adviser regulation which comes into force fully on 1 July, anyone offering personalised financial advice on KiwiSaver must also be licensed by FMA as an Authorised Financial Adviser (AFA).
Mr Hughes said the action FMA has taken in respect of Mr Diack's activities should serve as a warning to other KiwiSaver and financial product providers of their legal responsibility for those acting on their behalf and their moral obligation to protect their customers.
"The integrity of KiwiSaver as a financial product is crucial to New Zealanders having confidence to invest.
"FMA is very focused on ensuring financial advisers engage appropriately with investors and comply with the law. We will act decisively to curtail unacceptable practices by individuals and firms," he said.
Investors can check whether a person or firm offering a financial service is registered on the Financial Service Providers Register at www.fspr.govt.nz. A list of AFAs is published on the FMA website www.fma.govt.nz.