FMA announced KPMG Restructuring Services as Temporary Manager

The Financial Markets Authority (FMA) has announced it has appointed KPMG Restructuring Services NZ Limited as a temporary manager to manage three schemes previously operated by Fund Managers Otago Limited (FMO). As a result, FMO have been removed as Manager, effective as of 2 November 2020. In return, KPMG Restructuring Services has been appointed as a Temporary Manager of the Fund by the FMA, effective as at the same date.

FMO were the former managers of three managed investment schemes which comprise:

— Capital Mortgage Income Trust Group Investment Fund ( “CMIT”);

— NZ Mortgage Income Trust Group Investment Fund ( “NZMIT”); and

— NZ Mortgage Income Trust (No 2 Fund) Investment Fund ( “NZMIT2”)

(individually referred to as a “Fund” or collectively referred to as “the Funds”).

The removal was initiated due to issues relating to FMO’s governance, solvency of the manager and regulatory breaches.

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TE Asked to Remove FMO

As the Licensed Supervisor of the schemes, Trustees Executors Limited, or TE exercised its powers under the Financial Markets Conduct Act 2013(or FMCA)and Trust Deed to remove FMO. TE provided written advice to the FMA, setting out their reasons for removing FMO as manager and, in the best interests of investors, further requested that the FMA appoint a Temporary Manager. 

James Greig, FMA Director of Supervision, said Trustees Executors’ decision to remove FMO demonstrated that safeguards in the FMC Act could be used when necessary.

"Supervisors are the frontline regulators for managed investment schemes and their oversight is designed to ensure fund managers meet their obligations, and take appropriate action when managers do not meet those obligations."