FMA orders Simplicity NZ to remove misleading advertising

The ads appeared in a variety of media channels from August to October 2021

By Mina Martin

10 Mar 2022

Simplicity NZ has been ordered by the Financial Markets Authority (FMA) to remove its “All Greys” advertising campaign after it was found by the regulator to have breached fair dealing provisions.

The advertisements included the statement: “Get out of the game when you want to, retire with up to 20% more than the average KiwiSaver plan,” and encouraged people to switch their KiwiSaver fund to Simplicity.

The campaign appeared on TV channels, Facebook, YouTube, billboards, internet display banners, and Simplicity's website from August to October 2021, with the statement featuring prominently in the materials.

But FMA said the statement was unsubstantiated and likely to mislead or deceive under the Financial Markets Conduct Act 2013 (FMC Act).

Simplicity’s claim that consumers would be “up to 20% better off” was based on the present value of 45 years of the benefit of paying Simplicity’s fees relative to a higher average KiwiSaver fee. FMA said the assumptions the company relied on, in making the claim, were not reasonable, particularly that there would be no changes to fees over a 45-year period, given significant recent changes in KiwiSaver fees.

The assumptions underpinning the advertising claim, including about the impact of paying lower fees, were also not prominently disclosed in the advertising materials, so consumers were unable to examine or question those assumptions.

Paul Gregory, FMA director of investment management, said Simplicity had withdrawn the campaign promptly, accepted responsibility, and engaged with the FMA constructively, without defensiveness.

“Advertising can strongly influence investors’ decision-making, this is why the law states that any claims made in advertising must be substantiated,” Gregory said. “It is vital that providers ensure their marketing materials are factually accurate and don’t mislead. The direction holds Simplicity accountable to investors and means we have additional responses available if Simplicity does not make the necessary improvements or fails to comply with the direction order.”

Gregory said the case sends a signal to the financial services sector that FMA will continue to use its powers to sanction providers who make misleading claims in their advertising, as set out in its guidance.