FMA Directs Simplicity NZ Limited to Remove Misleading Ad and Improve Compliance Processes

The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has directed Simplicity NZ Limited to remove advertising materials that breached fair dealing provisions, and ensure future advertising is compliant.

The FMA direction relates to Simplicity's 'All Greys' advertising campaign, which included the statement, "get out of the game when you want to, retire with up to 20% more than the average KiwiSaver plan", and encouraged people to switch their KiwiSaver fund to Simplicity. The FMA considered the statement was unsubstantiated and likely to mislead or deceive under the Financial Markets Conduct Act 2013 (FMC Act).

The advertising campaign appeared on a variety of media channels from August to October 2021, including TV channels, Facebook, YouTube, billboards, internet display banners, and Simplicity's website. The statement appeared prominently in the materials.

The FMA reviewed the advertising campaign and determined, that when viewed as a whole, the campaign would likely mislead consumers to believe incorrectly that joining Simplicity would give them a retirement balance 20% greater than the average. 

Paul Gregory, FMA Director of Investment Management, acknowledged Simplicity had withdrawn the campaign promptly, accepted responsibly and engaged with the FMA constructively, without defensiveness.

Mr Gregory said: "Advertising can strongly influence investors' decision-making, this is why the law states that any claims made in advertising must be substantiated. It is vital that providers ensure their marketing materials are factually accurate and don't mislead."

The direction requires Simplicity to:

1. Cease and desist from publishing the advertising materials in question

2. Ensure all current and future promotional material comparing the benefits of a Simplicity fund with other similar financial products is not likely to mislead or deceive investors, particularly:

• Clearly distinguishing any representation about fees saved from any representation about a KiwiSaver balance projection

• ​Ensure all material assumptions supporting representations relating to Simplicity fees or projected retirement balances are disclosed in a sufficiently prominent way

3. Ensure any comparisons between a Simplicity financial product and a similar product are based on reasonable grounds, which are documented and approved by a senior executive.

4. Either remove the online 'Simplicity Difference Calculator' or ensure it is compliant and confirm in a report to the FMA.

5. Ensure that for the next two years Simplicity's advertising policy is fully implemented, it regularly ensures current and proposed advertisements are compliant, and its Board receives a report on FMC Act compliance practices at least every six months.

6. Advise all investors who joined Simplicity between 20 August and 30 November 2021 of the FMA's action and that Simplicity cannot predict or guarantee with any confidence that an investor will retire with 20% more than the average KiwiSaver plan if they switch to Simplicity.

7. Collate a summary of any complaints about the campaign over the next three months and provide it to the FMA.