FMA censures ethical fund manager Pathfinder over ads

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Generic money.

Generic money. Photo: RNZ / Rebekah Parsons-King

Ethical fund manager Pathfinder has been censured by the Financial Markets Authority for making misleading representations in two of KiwiSaver ads.

The ads related to animal testing and fossil fuels, and ran on social media and Pathfinder's website between October 2021 and May 2024, The FMA said.

"The FMA is satisfied that Pathfinder's conduct was a material departure from the fair dealing requirements of the Financial Markets Conduct Act and did not reflect the FMA's guide on advertising offers of financial products," FMA executive director response and enforcement Louise Unger said.

"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 a statement, Pathfinder said the ads featured two Pathfinder KiwiSaver Plan members sharing their views on why they chose it as their KiwiSaver provider, which represented that its funds did not invest in companies involved with fossil fuels or animal testing.

"The FMA found that the two digital ads were misleading as they should have been qualified with information about our investment process and, in particular the exceptions related to animal testing and fossil fuels we held at the time the ads were running," the company said.

"These exceptions were made in accordance with our Ethical Investment Policy."

However, Unger said 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 used fossil fuels to generate electricity.

"There was a material disparity between representations in the advertisements and the actual position."

She said Pathfinder should have qualified the advertisements by including prominent information about the exceptions it had granted as permitted by its ethical investment policy.

"For these reasons, we believe a censure is the proportionate response to Pathfinder's conduct."

Unger said Pathfinder promptly took down the two ads when the FMA brought the contraventions to its attention and had cooperated with the FMA's investigation.

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