1 Comment 1 CommentThe increase will take the FMA’s litigation fund annual budget to $6 million for 2019/20. The FMA’s litigation fund was set at $2 million per year when the regulator was established in 2011.
“Fair, efficient and transparent financial markets are vital for New Zealand’s economic wellbeing,” Commerce and Consumer Affairs Minister Kris Faafoi said.
“As the financial markets regulator, the FMA plays a key role in delivering those benefits for New Zealanders.
“However, cost increases and the rising complexity of investigating serious breaches of the law are placing pressure on the FMA’s enforcement and litigation functions.
“Institutions within the financial sector are often well-resourced and willing to litigate when enforcement action is taken.
“A larger legal fighting fund ensures the regulator is well placed to respond to misconduct and it sends a clear message that the FMA is resourced to take on those with deep pockets."
He said the increase to the litigation fund ensured the FMA was well-prepared to act as a proactive regulator of New Zealand’s financial markets.
“This will mean the FMA can continue to enforce the high level of professional standards the public expects from the financial sector,” Faafoi said.
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The FMA annual report makes for interesting reading, as this is a continuation of one of the stated requests of government in that report
Two points came through quite clearly.
The FMA has been focused on the investment market, this is widening with a renewed focus under the new laws coming.
The conduct and culture report for insurers was way off the mark the FMA expects, so they're gunning for that too.
And to round it out they have a section dedicated to the term ”good consumer outcomes” which is not going away.
The report makes for interesting reading. And chicken little doesn't sound quite so crazy after all ;)
It's not that court action is the only avenue for the FMA, they have many tools at their disposal. It is that court is an action the FMA is not afraid to use, and does use.
Under principals based law, the courts will be used to set precedent, this will then guide their regulation action in other matters to increase their efficiency and reduce the need for other court action.
A court decision makes it easy for the FMA to act, and it makes it hard to argue unless you go to court to challenge the precedent.
Fun time for insurers, and advisers, in the near future I expect.