Imposing more regulations on KiwiSaver funds could stifle the best performers, says Fidelity Life chief executive Milton Jennings.
Financial Markets Authority chief executive Sean Hughes said there were gaps in the rules relating to KiwiSaver schemes.
He says there should be more co-operation between regulators, and suggests “there is no prudential supervision for KiwiSaver.”
Prudential supervision assesses whether undue risks are being taken with investors’ money.
Jennings conceded the HuljichKiwiSaver saga – where investors were misled about the performance of the Huljich Wealth Management KiwiSaver fund – “certainly exposed a gap”.
But he said prudential supervision of KiwiSaver funds would be complicated.”Do you go down to [assessing] single stocks? It’s very hard.”
He said higher-risk funds could be a casualty of increased regulation, such as Fidelity’s Options fund, one of KiwiSaver’s top performers.
“We had noises from the regulators saying it’s too high risk for KiwiSaver… there’s been volatility over the five year period, but it’s probably the top performing fund, so do you want to stop that type of investment?”
Milford Asset Management’s investment committee chairman Brian Gaynor said funds already outlined their investment stance in prospectuses.
“And you can see by the way directors are being prosecuted regarding prospectuses at the moment it’s a very powerful document in terms of the law.”
But he said there were two glaring gaps in KiwiSaver regulation that Hughes had not mentioned.
“The disclosure of fees is probably the weakest area, the second is probably consistency in how to measure and report returns and performances.”
He called for the establishment of a KiwiSaver comparison website, managed by a body such as the FMA.