The New Zealand Government has proposed a third-party funding option for the new Financial Markets Authority (FMA), External Reporting Board and the Companies Office.

It has estimated the current cost of regulating financial advisers will be about $NZ6.2 million ($4.7 million) a year, all of which will be recovered through third-party funding.

The Government has received $NZ2.2 million ($1.6 million) from financial advisers in the current financial year.

In the new proposals, an authorised financial adviser (AFA) will pay a levy of $NZ680 ($523) with their annual registration, while registered financial advisers selling life and general insurance will pay $NZ140 ($107) a year.

A qualifying financial entity (QFE) will pay a levy of $NZ8000 ($6157) with registration plus the levy on each individual adviser.

The discussion paper gives the example of a QFE with 200 advisers, of which 140 are life and general insurance advisers, paying an annual charge of $NZ69,435 ($53,445).

This includes the proposed levy and current registration charges. Presently a QFE is paying $NZ5355 ($4121) a year.   

Insurance Council of New Zealand CEO Chris Ryan told insuranceNEWS.com.au the Government’s move will affect QFEs but the council “doesn’t feel strongly about the proposals”.

“But we do feel it is dangerous to get the private sector to pay for the public sector,” he said.

“The move also comes at a time when the cost of compliance is increasing in  all areas across the board.”

Commerce Minister Simon Power says if the FMA is to do its job, it has to be adequately funded.

“The Government recognises that in order for the FMA to do its job it needs to be adequately resourced, and market participants who stand to benefit from operating in this stronger regulatory environment should contribute to that,” he said.

“We’ve given the main financial market regulator, the FMA, more grunt and it needs resources to deliver on that.”

Currently the FMA has a budget of $NZ26 million ($20 million) and the Government has estimated the cost of enforcing the adviser regulations will cost at least $NZ7.6 million ($5.8 million) by 2014.

Mr Power says the proposals will come into force on February 1 next year, but the industry has until July 8 to make submissions on the discussion paper.