An investor pressure group is preparing a Petition to Parliament to request the Government review the default KiwiSaver provider status of ANZ-owned fund manager ING.
This comes after the Commerce Commission reached a record $45 million settlement with ANZ over the promotion of ING’s Diversified Yield and Regular Income Funds last month.
The Commerce Commission alleged that the promotion of the degree of investment risk in the two ING Funds was “misleading” and that there was sufficient evidence to pursue proceedings against both ING and ANZ for breaching the Fair Trading Act. The regulator decided against this course of action, saying the settlement was the best outcome for investors in the funds.
The Frozen Funds Group said it had decided to draw public attention to the risks that ANZ/ING’s behaviour presents to all New Zealanders who are saving on a regular basis for their retirement.
The Group says more than 14,000 New Zealander have seen $700 million of their life savings in the Frozen Funds jeopardised by ANZ/ING, yet currently, the same companies hold more than $1 billion of savings from nearly 300,000 New Zealanders in their KiwiSaver schemes.
“The fact the government contracted ANZ/ING in 2007 to be one of the six default KiwiSaver providers, gives ANZ/ING a level of respectability and trust that these companies may have merited at the time, but have lost since then.”
The Group believes there are four compelling reasons to review ANZ/ING as a default KiwiSaver provider.
Firstly, the Commission has concluded after its investigation that ANZ/ ING “engaged in misleading or deceptive conduct and/or made false or misleading representations”.
The Frozen Funds Group says ANZ/ING is a default KiwiSaver that challenges the regulator’s conclusions and yet “deftly avoids full disclosure by settling out-of-court”.
Secondly, the Group says a majority in Parliament wishes to debate a Private Member’s Bill that challenges the legality of the waiver that ANZ/ING made 99% of the investors sign as condition for a partial compensation, while the Commerce Commission’s inquiry was still on-going.
Thirdly, the Group believes the Commission also made the most damning assessment of the performance of ING as a fund manager.
The Commission said: “ING did not measure or manage risks, bought investments that it could not know the contents of, and did not perform appropriate returns attribution analysis.”
Fourth, the Frozen Funds Group believes a review and possible removal of ANZ/ING from the list of default providers would enhance competition in the market and signal to the other default providers to maintain standards.
“It would also signal to non-default KiwiSaver providers that there will be occasional vacancies at the top and that cooperative and ethical behaviour is rewarded. We believe non-default providers will support the envisaged Petition to Parliament,” says the Group.