Fund managers under scrutiny
New Zealand's unregulated funds management industry is likely to come under greater scrutiny this year, both locally and internationally.
Friday, January 14th 2000, 12:00AM
New Zealand's unregulated funds management industry is likely to come under greater scrutiny this year, both locally and internationally.
The Securities Commission (as reported earlier) has launched a review of the funds management industry and this is likely to attract some international attention.
Currently, New Zealand is a bit of an anomaly worldwide as most similar jurisdictions require managers to be licensed, in fact the International Organisation of Securities Commissions is promoting the licensing of funds managers as regulatory best practice.
The New Zealand market takes a light-handed approach and has a self-regulating environment. The only issue is there isn't a lot of regulation, nor enforcement.
New Zealand Society of Investment Analysts chairman Neil Paviour-Smith says some managers "have got away with murder over the years", particularly in the way they have reported performance.
In the absence of regulation one of the possible tools available to the industry for self-regulation is adoption of the internationally recognised Association of Investment Management and Research (AIMR) standards.
AIMR is an international body which has produced a stringent set of rules covering things like performance reporting and ethics.
Since 1996 a small group of people have been attempting to establish an AIMR chapter in New Zealand.
While this has failed due to a number of reasons, including industry politics, it appears likely to happen in 2000.
"I think it will happen this year," Paviour-Smith says.
One of the protagonists in New Zealand has been William M Mercer chief executive Louis Boulanger. He says establishing an AIMR chapter would be a good catalyst to helping the industry effectively self-regulate itself.
He says setting up an AIMR chapter isn't the solution to the industry's lack of self-regulation, however it would be a step in the right direction.
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