The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has censured Pathfinder Asset Management (Pathfinder) under the Financial Markets Conduct Act 2013 (FMCA).
The FMA is satisfied that between October 2021 and May 2024, Pathfinder made misleading statements about the nature of its KiwiSaver Funds’ ethical investments in two advertisements on social media and its website relating to animal testing and fossil fuels.
FMA Executive Director, Response and Enforcement, Louise Unger said: “KiwiSaver is vitally important to the wellbeing of New Zealanders. 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.”
In an advertisement on social media, “Tara’s story”, Pathfinder represented that its funds did not invest in companies involved in animal testing. In a second advertisement on its website, “Estefania’s story”, Pathfinder represented that its funds did not invest in companies involved in fossil fuels or animal testing. Tara’s story ran for approximately 23 months, and Estefania’s story was available on Pathfinder’s website for approximately 13 months.
The FMA’s view is that both advertisements were misleading because there was no information or qualifications included which informed investors that Pathfinder’s funds held investments in five companies involved in animal testing for pharmaceutical purposes and one company that uses fossil fuels to generate electricity. While Pathfinder’s Ethical Investment Policy generally excludes investments in companies deriving greater than 5% of revenues from fossil fuel activities and animal testing, these companies had been granted exceptions in accordance with the Policy’s criteria.
“There was a material disparity between representations in the advertisements and the actual position,” Ms Unger said. “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. The FMA’s primary concern is the harm caused by investors being misled about the investments made by Pathfinder’s KiwiSaver Funds; the actual benefit Pathfinder may have obtained from the advertisements does not detract from this harm. The FMA is satisfied that Pathfinder’s conduct was a material departure from the fair dealing requirements of the FMCA and did not reflect the FMA’s guide on advertising offers of financial products. For these reasons, we believe a censure is the proportionate response to Pathfinder’s conduct.”
Pathfinder, which had been improving the clarity of its Ethical Investment Policy, made a list of exceptions it has granted available on its website after being contacted by the FMA, and promptly took down the two advertisements when the FMA brought the contraventions to its attention.
The FMA acknowledges Pathfinder’s cooperation during its investigation and its decision to remove the advertisements when the FMA began making inquiries.
Download FMA advertising offers of financial products guidance note
