The Financial Markets Authority (FMA), New Zealand’s financial watchdog, has published insights from its supervision of funds that claim to have ethical features.
After reviewing disclosure documents, advertising, reporting on sustainability progress, and whether investments held by funds align with their sector exclusion policies, the New Zealand regulator did not identify any situation where an issuer deliberately used ethical labeling or marketing without intending to implement an ethical investment strategy.
The FMA, however, did see examples of confusing, unclear, and inconsistent disclosure that may have made it difficult for investors to understand the product or whether ethical claims were being adhered to.
This led the regulatory agency to provide feedback to all 10 MIS managers reviewed on areas for improvement, and the insights publication notes good practices for other issuers to consider.
“FMA research has shown that investors place a lot of trust in issuers”
Louise Unger, Executive Director of Response and Enforcement at the FMA, said: “FMA research has shown that investors don’t always investigate the underlying details of funds, and understandably place a lot of trust in issuers to deliver the advertised benefits of ethical investment products. It is therefore important for the FMA to maintain oversight of ethical investing disclosure, and this is now part of our business as usual supervision approach.”
In 2022, the FMA published a thematic review of how managed investment scheme (MIS) managers had applied the FMA’s disclosure framework for integrated financial products guidance issued in 2020. Ethical investment claims must comply with the fair dealing provisions in Part 2 of the Financial Markets Conduct Act 2013.
Chinese scammers using fake FMA license certificates
In July, New Zealand’s financial watchdog warned investors of fake FMA license certificates being used to try and convince people to invest money with phony investment brokers.
After having received a large number of complaints, the regulator highlighted the case of Collinson Crowdfunding Limited, which holds a license for operating a crowd funding service, but has been used in these scam attempts without being directly involved in this matter.
Collinson Funds Management Ltd (NZBN: 9429046190161) has been used in scams operated on various Chinese social media platforms including Weibo, zhihu.com, sohu.com, and Baidu.com. Collinson Funds Management Ltd has advised that they do not provide their services and products in China.
Most FSP and license holders are New Zealand-registered companies. Some companies have their contact details or website address displayed on the Companies Register.
