The New Zealand Financial Markets Authority (FMA) has published a review of fee, incentive and commission disclosures across managed investment schemes, discretionary investment management services (DIMS) and financial advice providers. Disclosure was generally satisfactory and most issues were minor, but gaps in clarity, completeness and consistency included some noncompliance with regulatory requirements. Providers should explain material charges plainly and present a coherent view of total costs across investor documents. The scheme review covered 55 schemes managed by 37 managers. For 40% of schemes, disclosure did not consistently follow prescribed fee categories, wording or formats, without clear justification for deviations. Around 50% of reviewed DIMS providers had unclear disclosure of certain fee components, while 25% of financial advice providers had gaps in clarity, completeness or consistency. Some advice providers also lacked records supporting fees charged or failed to disclose fees, incentives and commissions at the appropriate advice stage. Scheme managers should reconcile total costs in product disclosure statements and distinguish estimated from actual fees. DIMS providers should clearly present total percentage charges, include all relevant fee components and disclose rebates and other remuneration arrangements affecting investor costs. Financial advice providers should explain charges for early product closure or not proceeding with advice and provide disclosures at the required advice stages. Some providers have already amended disclosures following feedback to them or their statutory supervisors. The FMA plans targeted reviews to assess how outstanding issues have been addressed.
New Zealand Financial Markets Authority finds fee disclosure gaps and calls for clearer cost information
New Zealand’s Financial Markets Authority found fee disclosure generally satisfactory across managed investment schemes, discretionary investment management services and financial advice providers, but identified clarity gaps and some noncompliance. Providers should explain material fees, incentives and commissions plainly and make total costs clear and consistent across documents. Some have already amended disclosures, and the regulator plans targeted reviews to check corrective action.