by Susan Edmunds
Authorised financial advisers could end up paying an extra $200 a year.
Commerce and Consumer Affairs Minister Paul Goldsmith said the FMA needed enough funding to carry out its statutory responsibilities and maintain confidence in the markets.
But he said its budget was set in 2011, before the Financial Markets Act was introduced.
“This Act has led to the FMA having significantly greater functions and responsibilities.”
A consultation paper has been released that notes the financial markets are now much bigger and more complex to regulate.
The FMA currently gets $26.2 million a year in funding, from the Crown and financial markets participants’ levies.
A cash surplus the FMA built up in its early years by delaying projects and using other cost-saving measures is likely to run out by mid next year.
The FMA also faces challenges including hiring the right people, building its technology capability and maintaining engagement with the public and markets.
The consultation paper outlines three funding options that are possible. The FMA would like to get to $38.6 million per year.
It says it needs that to enable it to proactively identify risks, build its ability to assess harms and oversee conduct in insurance and banking, engage with the market, deal with disruptive market events and improve its ability to gather and use intelligence, among other things.
The Government’s preferred position is for the additional funding required for the FMA to come from financial market participants via the existing FMA levy, which is paid by participants for each class in which they do business.
With no funding change, 60% of the FMA’s total funding will come from the FMA levy, reset to $17.1 million. Under the biggest change proposed, the levy would make up 70%, or $27 million a year.
Under the no-change model, AFAs would pay $300 a year, or 4.1% of total levy revenue. Under the lower funding case, they would pay $420, or $520 under the FMA's ideal scenario.
That is up from $348 at present.
“We want to hear what consumers, industry groups, financial market participants and businesses that have an interest in the FMA think of the options presented and proposed changes to the FMA levy,” Goldsmith said.
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$26m x 2% = $520,000 = the FMA should better manage what they receive from the government, and resist burdening and already burdened industry