Government to increase FMA’s funding and levy settings

Published: 14 May 2020

The Government is making changes to the Financial Markets Authority’s (FMA) levy to implement an increase in its funding. The funding decision, made through Budget 2020, involves increasing the FMA’s annual operating funding over the next three years.

The increases in the FMA’s funding are below:

Year

Increase

Total FMA appropriation

2020/21

$12.5 million

$48.5 million

2021/22

$17.5 million

$53.5 million

2022/23

$24.8 million

$60.8 million

This increase will be phased in over three years to minimise the burden on the financial sector who contribute to the FMA’s funding through levies. This phasing has been adjusted from two years to three years in response to COVID-19.

In recent years, the FMA has faced increasing cost pressures and an expanding regulatory remit and responsibilities, particularly in relation to preparing for the new financial advice regime to improve New Zealander's access to high-quality financial advice. The Government is increasing the FMA's funding to allow the regulator to effectively respond to these pressures and its widening remit.

The increase in the FMA’s operational funding will be apportioned between the Crown and levy payers. The majority of the increase will come from levy payers. Levies for the first year of the FMA’s phased funding increase (2020/21) have now been confirmed, and are available below.

Work continues on the levies for the remaining two years of phasing (2021/22 and 2022/23), along with the levies required for the recently delayed financial advice regime.

Further information, including the Cabinet paper, Cabinet minute, and Regulatory Impact Statement, is available on MBIE's Financial Markets Authority funding page.

Background

Review of FMA's funding and levies

In January 2020, the FMA and MBIE, as the FMA's monitoring agency, consulted on options to ensure the FMA's funding, including its levy settings, is proportionate to its workload.

MBIE also commissioned PwC to report on the efficiency and effectiveness of the FMA and its funding needs. In its report, PwC noted that the FMA is a high-performing organisation that delivers a lot for the funding it receives, with good alignment between its activities and its main statutory objective.

New financial advice regime

The new financial advice regime is implemented through the Financial Services Legislation Amendment Act. The Government has delayed the new regime's commencement date by more than eight months to early 2021, to allow advisers to focus on helping clients, customers and families during COVID-19.

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