2021 funding and levy review

2021 funding and levy review

In 2021, MBIE and the FMA initiated a review of the FMA’s funding requirements and the FMA levy. The review was commenced in response to the FMA’s expanding remit under 3 new legislative regimes: Conduct of Financial Institutions (CoFI), Insurance Contract Law (ICL) and Climate-Related Disclosures (CRD).

The objectives of the review are to:

• review the FMA’s additional funding requirements to ensure that it can meet its new statutory functions under the CoFI, ICL, and CRD regimes, and can operate as a credible and effective financial markets regulator
• consider the level of Crown and third-party levy funding that is appropriate to reflect the public-private good elements of the FMA’s new role and operations under these regimes and
• ensure that the FMA levy settings remain appropriate and proportionate to the benefits received.

As part of the funding review, MBIE contracted Deloitte to conduct an independent assessment of the funding options and underlying costings.

Consultation

In October and November 2021, MBIE and the FMA consulted on changes to the FMA’s funding and levy. Following consultation, decisions about funding and levies for the ICL regime will be made at a later date and closer to when the Insurance Contracts Bill has been passed by Parliament.

17 written submissions were received. 1 submitter did not want their submission published and the remaining 16 submissions can be found below.

Read the submissions from the consultation on the discussion document(external link)

Outcome of the 2021 funding and levy review

In relation to the CoFI and CRD regimes, Cabinet agreed to increase the FMA’s operational funding by $15.596 million per annum in 2025/2026 and outyears. This will result in an increase to the FMA’s total annual operating funding from $60.805 million to $76.401 million in 2025/26. This increase will be phased over a 4-year period commencing in 2022/2023.

Regulations giving effect to Cabinet’s decisions on the levy for the CoFI and CRD regimes were made in August 2022. New levy amounts will apply from 1 September 2022.

Financial Markets Authority (Levies) Amendment Regulations 2022(external link) — New Zealand Legislation

More information about the funding and levy review

See the new levy changes set out in tables:

New FMA levies – 2021 funding and levy review

Key documents