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[Weekly Wrap] I hope you haven't missed this

We’ve had two big reports in the past week – and they are worth having on your reading list. 

Friday, December 12th 2014, 4:05PM

by Philip Macalister

The FMA yesterday released its so-called Strategic Risk Review.  It’s basically a stock take of where it sees the biggest risks to investors in the market. (Here is this morning's story which you may have missed because of a loading error).

While the report is a high level document it is useful. One of the things which came out of it, for me and from the press conference yesterday, is the responsibility now faced by boards and directors to do a good job leading and steering their corporate vessels.

Having accountability at the top is critical (and something our politicians could learn from).

One of the seven risks identified was around investor education. Unfortunately the press conference was abruptly ended on the hour and we never got to ask questions about this issue.
Whose role is it to educate the public and what role does the FMA have here?

The other report was issued in Australia on Sunday. The FSI or Financial Systems Inquiry has some useful parallels in New Zealand.

One theme is around vertical integration – basically where a firm controls everything from product manufacturing to distribution.

Yes, banks and KiwiSaver is the obvious one.

The final FSI report backed away from calling for there to be legal separate between firms which make and distribute their own funds.

It said: "product issuers and distributors should take greater responsibility for the design and targeted distribution of products".

I preferred the FMA version where it talked clearly about putting the customers’ interests first. It is debatable whether that actually happens 100% of the time now, especially with the behaviours demonstrated by some QFEs.

It was good to hear that the FMA is taking the issue about distribution of KiwiSaver seriously, albeit slowly. Head of compliance, Elaine Campbell, said FMA was doing some work on this, but it won’t be finished till the middle of next year. Part of the work is to see how many members switched to a bank scheme due to questionable selling practices and then later moved back to their previous manager.

You can understand the logic behind that thinking, but you can’t help that the majority of members maybe a bit apathetic about what has happened. Time will tell on that one.
What was encouraging is that the FMA is prepared to take enforcement action if it feels that an organisation isn’t changing quickly enough.

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.15 ▼4.04 4.49
ANZ Special - 3.65 ▼3.54 3.99
ASB Bank 5.20 4.15 4.09 4.39
ASB Bank Special - 3.65 3.59 3.89
BNZ - Classic - 3.65 ▼3.49 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
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China Construction Bank Special - 3.19 3.19 3.19
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Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 ▼4.15 ▼4.09 ▼4.39
HSBC Premier 5.24 3.35 3.35 3.35
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.65 3.85 3.95 3.89
Kiwibank 5.80 4.30 4.34 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.59 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 5.30 4.86 4.14 4.19
Lender Flt 1yr 2yr 3yr
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.69 3.69 ▼3.89
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Sovereign Special - 3.65 3.75 4.05
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Westpac 5.34 4.15 4.09 4.49
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