In 1997, Marama invested in a forest. She understood when she invested that the trees would take around 25 years to mature. They would then be harvested, which would take around a year, and the return on the investment would be paid to Marama as a lump sum.
In 2022, Marama learnt the scheme manager had other forests in the area they managed, that were also planted between 1996 and 1997. The scheme manager proposed to investors a collective harvest of the forests (rather than harvesting them individually). The harvest would take around 10 years and Marama would receive progress payments over a 12-year period. The scheme manager believed a collective harvest was the most profitable way to harvest the forests.
Marama complained to the scheme manager that the proposal was not fair. It did not suit older investors, like Marama, who wanted a lump sum return paid soon, being the basis on which the investment had been sold to them.
Marama also complained to the scheme manager that they had not disclosed in the 1996 prospectus that they had other forests in the area they managed. Marama believed the reason for the proposal was that the scheme manager had not adequately planned to harvest all forests that were going to mature at the same time.
The scheme manager was unable to resolve Marama’s concerns so she asked FSCL to investigate her complaint.
Review
We concluded that we could not investigate Marama’s complaint because it fell outside our rules, known as our terms of reference.
We could not consider Marama’s concerns about information in, or omitted from, the 1996 prospectus. Under our rules, we cannot consider a complaint where the act or omission that led to the complaint occurred before 1 April 2010.
We also could not consider Marama’s concerns that the scheme manager had not adequately planned to harvest the trees or that they had proposed a collective harvest. Under our rules, we cannot consider a complaint about the management of an investment scheme as a whole.
Resolution
Marama accepted our decision that we could not investigate her complaint.
Insights for consumers and participants
When we receive a complaint about an investment, we consider whether the consumer is complaining about investment performance. We cannot consider concerns about how an investment has performed, unless the complaint is about non-disclosure or misrepresentation, or misleading conduct.
We also consider whether the consumer is complaining about how their investment has been managed. We cannot consider how a scheme (or fund) manager has managed the scheme (or fund) as a whole. Government regulators, particularly the Financial Markets Authority, are the appropriate place to consider investors’ concerns about the management of an investment scheme (or fund) as a whole. Regulators have the power to undertake broader investigations than what dispute resolution schemes, like FSCL, can undertake. Occasionally, we also consider time limitations. Our rules do not prevent us from investigating a complaint about an investment that was made before 1 April 2010, if the act or omission leading to the complaint happened after that date. However, in Marama’s case, the act/omission occurred before 1 April 2020, so the complaint was outside our jurisdictional time limits.
