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NZ beefs up financial regulatorís litigation fund

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New Zealand has increased the litigation budget at the Financial Markets Authority (FMA) as the regulator prepares to oversee a new conduct regime that promises strong penalties for financial institutions which breach their obligations.

Under the new regime, insurers selling add-ons such as travel insurance through intermediaries that are not financial advice providers will be accountable for any conduct breaches.

Commerce and Consumer Affairs Minister Kris Faafoi, who plans to introduce legislation for the new conduct regime to the New Zealand Parliament by the end of the year, says fattening the litigation fund ensures the FMA is well-prepared and proactive.

“It sends a clear message that the FMA is resourced to take on those with deep pockets,” Mr Faafoi said.

The FMA’s budget will rise by $NZ4 million ($3.7 million) to $NZ6 million ($5.55 million) for the year to June 30, 2020. In its annual report published last week, the FMA says the new funding will give it momentum as an “active regulator”.

Responding to legal action brought by ANZ earlier this year was “long and costly,” and the authority had “far exceeded” its litigation budget.

The FMA said a comprehensive review exposed “gaps in the legislation for regulating conduct” in banking and insurance, and this resulted in the Government setting out its intentions to regulate and license this sector, subject to parliamentary approval.