Goldsmith goes with 'enhanced' funding option for Financial Markets Authority

The Financial Markets Authority will get an extra $9.8 million a year after Commerce Minister Paul Goldsmith signed off on an increase in the regulator's funding to beef up its monitoring

Mr Goldsmith approved the move which will see most of the burden fall on financial services providers through the annual levy they pay, which officials say will enable the market watchdog "to proactively engage with the populations it regulates and with those populations that are at the perimeter of its regulatory sphere of activity" and "should allow FMA to regulate financial markets more effectively and should come closer than the base case to what is expected internationally of a financial markets conduct regulator". Goldsmith also increased funding for the Companies Office by $5.3 million and adjusted the agency's fees.

"The FMA's funding increase will come from changes in levies on financial services providers," Mr Goldsmith said in a statement. "While the majority of levy payers will see an increase, the consultation process has given consideration to the structure of the FMA levy model so as not to pose barriers to entry or growth for levy payers."

The FMA sought the enhanced funding case, largely paid for through levy increases, that it said at the time gave it "the best chance to continue to develop a risk-based intelligence-led organisation that is right-sized for New Zealand and to address the mandate that it has, and be best placed to support the long-term growth and innovation needed in New Zealand's capital markets."

The market regulator was set up in 2011 as part of a wider overhaul of the financial markets, amalgamating various supervision responsibilities that had been spread across a number of agencies.

The FMA said the decision gave it certainty about its future and allowed it to develop medium-term plans on how to respond to risks in financial markets, and build up its capabilities as a regulator. The regulator built up cash reserves in its early years, enabling it to operate above its funding base, though that's set to be exhausted at the end of this financial year.

"The additional funding approved this week covers the deficit in our financial resource to allow us operate at our current level and also provides the capacity for some additional investment both in people and systems," the agency said in an emailed statement.

The government has also agreed to a capital grant of $2.25 million in the current financial year enabling it "to move ahead with its decision to investment in intelligence/data analytics and knowledge management systems," it said.

(BusinessDesk)