The Government has announced an increase of $4 million to the Financial Markets Authority’s litigation fund for 2019/20 to strengthen enforcement capability.
The increase, which will bring the regulator’s litigation fund annual budget to $6 million for 2019/20, is intended to ensure the regulator has access to the resources required to bring legal proceedings when it needs to.
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,” says Commerce and Consumer Affairs Minister, Kris Faafoi.
“As the financial markets regulator, the FMA plays a key role in delivering those benefits for New Zealanders.”
He added: “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.”
Faafoi noted that a larger legal fighting fund sends a message that the regulator is sufficiently resourced to “take on those with deep pockets” while being well placed to respond to misconduct.
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,” said Faafoi.