09 March 2022

FMA directs Simplicity to remove misleading advertising and improve compliance processes

Media Release
MR No. 2022 – 6
9 March 2022

The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has directed Simplicity NZ Limited to remove advertising materials that breached fair dealing provisions¹, 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. The FMA determination was based on:

  • the claim that consumers would be ‘up to 20% better off’ with Simplicity was based on the present value of 45 years of the benefit of paying Simplicity’s fees relative to a higher average KiwiSaver fee. The FMA concluded that assumptions relied on, in making the claim, were not reasonable, in particular the assumption of no changes to fees over a 45-year period was unrealistic, especially given significant recent changes in KiwiSaver fees, as was the assumption of all other factors being equal, such as investment returns.
  • the assumptions underpinning the advertising claim – including the core assumption about the impact of paying lower fees – were not prominently disclosed in the advertising materials, so consumers were unable to examine or query those assumptions even if they had been aware of them.

Paul Gregory, FMA Director of Investment Management, acknowledged Simplicity had withdrawn the campaign promptly, accepted responsibly and engaged with the FMA constructively, without defensiveness.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 holds Simplicity accountable to investors and means we have additional responses available if Simplicity does not make the necessary improvements or fails to comply with the direction order.

“This case sends a signal to the financial services sector that we will continue to use our powers to sanction providers who make misleading claims in their advertising, as set out in our guidance.”

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.


View full details of the published direction to Simplicity.

¹ The ‘fair dealing’ provisions in the FMC Act prohibit:

  • misleading or deceptive conduct, including conduct which is likely to mislead or deceive; and
  • false, misleading or unsubstantiated representations.

Media contacts:

Andrew Park
FMA Media Relations Manager
[email protected]
021 220 6770

Campbell Gibson
FMA Senior Adviser, Media Relations
[email protected]
021 945 323