Government to increase FMA’s funding and set new levies

This funding increase will ensure the FMA can take a proactive and responsive approach to monitoring and enforcing 2 new legislative regimes that are coming into force: the Conduct of Financial Institutions (CoFI) and Climate-related Disclosures (CRD).

The increase in the FMA’s funding will be apportioned between the Crown and levy payers. As part of the new funding arrangement, the Government has agreed to set new industry levies following consultation last year. The levy increase will be phased in over 4 years to minimise the burden on the financial sector. The levies have also been apportioned by entity size and type, to ensure smaller entities are not unduly burdened with high costs.

Levies for the 4 years of the FMA’s phased funding increase have been set and are available on our website. The new levies will come into effect on 1 September 2022.

New FMA levies – 2021 funding and levy review

Currently, the majority of the FMA’s funding is recovered from market participants through the FMA levy (83%), with the Crown contributing the remaining 17%. The proportion of the Crown’s contribution is decreasing slightly to 16% from 2025/26. Through Budget 2022, the Government has agreed to contribute all capital funding and some operational funding for CoFI and CRD towards the FMA, which will provide some cost relief to entities.

While MBIE and the FMA also consulted on funding requirements for the Insurance Contract Law (ICL) regime, decisions about funding for this regime will be made at a later date. Any levies for this regime will take effect after the Insurance Contracts Bill has been passed by Parliament.

Further information, including the Cabinet paper, Cabinet minute, and Regulatory Impact Assessment, is available on our website.

Financial Markets Authority funding

Background

As the financial markets conduct regulator, the FMA plays a critical role in ensuring that businesses, investors and consumers can confidently participate in financial markets.

An appropriately resourced regulator helps set the conditions needed for New Zealanders to have the confidence to invest in financial markets, and to access capital to grow and support our economy.

Review of FMA’s funding and levies

The FMA’s funding was reviewed in 2021 due to its expanding legislative remit, due to 3 new regimes: Conduct of Financial Institutions (CoFI), Insurance Contract Law (ICL) and Climate-related Disclosures (CRD).

Decisions on changing the FMA’s levy for the CoFI and CRD regimes to enable an increase were made in April 2022 following public consultation in 2021.

Collection of new levies

The levies for CoFI will be collected by the Companies Office from 1 September 2022 as part of the annual confirmation filing on the Financial Service Providers Register.

Due to the complexity and nature of the levy changes required from an information technology perspective, the levies for CRD which will also come into force on 1 September 2022 will, temporarily, be collected by the FMA via an invoice. The Companies Office currently anticipates collecting the CRD levy at the time climate statements are required to be filed (expected to be in 2024).