$4 million increase in FMA’s litigation fund to strengthen enforcement capabilityCommerce and Consumer Affairs
The Government is increasing the Financial Markets Authority’s litigation budget by $4 million for 2019/20 to ensure the regulator has access to the resources required to bring legal proceedings when it needs to.
The 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 says.
“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,” Mr Faafoi says.
He says the increase to the litigation fund ensures the FMA is 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,” says Mr Faafoi.
Notes to editors:
The FMA’s litigation fund exists to ensure the FMA is always in a position to effectively begin or continue legal proceedings. It covers all direct external costs which are incurred from the time external or internal legal counsel are engaged with a view to possible litigation.
The fund ensures the decision to take enforcement action is made on a principled basis and not constrained by its operational budget.
The litigation fund is financed by the Crown, whereas the FMA’s operational budget is funded through a mixture of Crown funding and levies on the industry.
Any unspent funds from the litigation fund are returned to the Crown at the end of the financial year.