FMA takes action against misleading advertisements
The Financial Markets Authority (FMA) has formally censured Pathfinder Asset Management under the Financial Markets Conduct Act 2013 for misleading representations in its advertising.
The censure comes after an investigation into Pathfinder's claims regarding the ethical nature of its KiwiSaver Funds.
Misrepresentations in advertising
Between October 2021 and May 2024, Pathfinder promoted its KiwiSaver Funds on social media and its website, claiming the funds avoided investments in companies engaged in animal testing and fossil fuel operations. These claims were featured in two specific advertisements, “Tara’s story” and “Estefania’s story,” which implied complete exclusion of such investments.
However, FMA, which recently published its insights report on the inaugural set of climate-related disclosures from climate reporting entities, found these advertisements misleading as they failed to disclose exceptions that allowed investments in five companies conducting animal testing for pharmaceuticals and one company using fossil fuels for electricity.
The importance of accurate fund representation
FMA executive director of response and enforcement Louise Unger (pictured above), highlighted the significance of truthful advertising in financial products.
“KiwiSaver is vitally important to the wellbeing of New Zealanders,” Unger said. “Misleading statements about a fund’s ethical investment policy have the potential to result in consumers investing in a fund that is inconsistent with their values, and to cause damage to investor confidence in KiwiSaver.
“There was a material disparity between representations in the advertisements and the actual position. In this case, Pathfinder should have qualified the advertisements by including prominent information about the exceptions it had granted as permitted by its Ethical Investment Policy."
Pathfinder’s response and FMA’s ruling
Upon FMA’s review, Pathfinder took immediate action by removing the problematic advertisements and updating their website to clarify the exceptions in their Ethical Investment Policy.
FMA, which announced a pilot regulatory sandbox program earlier this month, acknowledged Pathfinder’s cooperation during the investigation and its prompt response to the concerns raised.
Click here to read the FMA media release. Download FMA advertising offers of financial products guidance note here.
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