Fund managers should be accountable to a regulator: Mayhew

Commissioner for Financial Advisers David Mayhew believes fund managers must be directly accountable to a regulator.

Thursday, September 2nd 2010, 5:19AM 3 Comments

by Jenha White

He says the Ministry of Economic Development (MED) discussion paper on the review of Security Law notes that globally collective investment schemes are becoming the dominant method of investing for retail investors.

He asks why fund managers who manage and promote retail KiwiSaver schemes are not being subjected to licencing?

Mayhew says the fact that there are trustees who may be monitoring KiwiSaver fund managers is beside the point.

He believes for the investing public to have confidence that the fund manager will manage their money with their interests in the forefront of considerations, fund managers must be directly accountable to the regulator i.e. licensed.

"That applies to both charlatans and amateurs alike, no matter how smooth talking or philanthropic: investor protection demands no less."

He says this is not simply about gate keeping - establishing fitness, propriety and competence at the outset; but also about insisting on appropriate governance controls and having the capacity to suspend the licence when serious concerns arise; and ultimately to cancel it if misconduct is established.

Mayhew believes the requirement to be relicensed periodically is potentially a significant influence on behaviours.

Jenha is a TPL staff reporter. jenha@tarawera.co.nz

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Comments from our readers

On 2 September 2010 at 7:55 am Independent Observer said:

Finally some common sense.

As stated previously - Kiwisaver is our next "financial company" debacle on its current course

On 2 September 2010 at 10:25 am Forthright said:

I would suggest the proposed super regulator the FMA, which as we know is proposed to role into one, the regulatory powers of the Securities Commission and some of the powers of the MED. May also wish to consider including the powers of the Commissioner for Financial Advisers. It would make sense to have only one referee instead of the proposed three referees, six line judges and several more video referees.

On 2 September 2010 at 2:34 pm w k said:

re: Forthright - trouble is, not nobody wants to be made redundant. where else can they find another job?

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