The Financial Markets Authority (FMA) has appointed KPMG Restructuring Services NZ Limited as its new temporary manager for the three schemes previously operated by Fund Managers Otago Limited (FMO) – the first time that the regulator used its power to appoint a temporary manager.
KPMG Restructuring Services will now manage the three schemes after Trustees Executors Limited, the schemes' supervisor, decided to remove FMO from its role due to issues relating to its governance, solvency of the manager, and regulatory breaches.
Two of the three schemes, Capital Mortgage Income Trust and the NZ Mortgage Income Trust, are legacy schemes that have been closed for several years and are in the process of being wound up.
The third scheme, the NZ Mortgage Income Trust (No 2) Fund, has around 600 investors. Its fund was open, but the removal of FMO as its manager would most likely result in the same fate as the other schemes.
James Greig, the director of supervision at FMA, said the decision to remove FMO as manager proved 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,” Greig said, as reported by Fuseworks Media.