We lodged a submission on the Review of the Financial markets Authority Funding and Levy Discussion Paper on 25 February 2020.
As part of a wider review of the FMA's operational funding requirements, MBIE recently engaged PwC to conduct an independent review of the FMA's efficiency and effectiveness.
The review identified three separate funding options being:
- Current spend (which exceeds the current appropriation)
- A base case, and
- An enhanced case.
We believe that the enhanced funding option provides the most appropriate level of funding for the FMA as the principal conduct regulator of New Zealand's financial markets.
The Discussion Paper also examines the apportionment of any levy increase between the Crown and third party levy funding. The Crown currently contributes around 25% of the FMA's annual appropriation.
We believe that the Crown should at least maintain its current contribution, which is fairly reflective of the public good element of the FMA's operations versus the private benefit to levy payers of fair, efficient and transparent financial markets. We note that ASIC and the FCA, the financial markets regulators in Australian and UK respectively, receive no Crown funding, and are fully funded by third party levies and fines.
In our submission, we highlight to MBIE the potential for further consolidation of the sector as a result of increased costs to auditors, and point out the value derived by market participants and the wider public from accessible and high-quality audit.