Industry levies for AFAs are to rise from $330-a-year to $380 plus GST for the 2020/21 year as the Crown prepares to reduce its funding of the FMA from the current 25% to 17% over three years.
The rise in fees, announced as part of the Government’s 2020 Budget, is to help the industry regulator following its calls for increased funding due to cost pressures. The organisation’s annual budget was last reviewed in 2016.
Katrina Shanks, CEO of Financial Advice NZ, says: “While Financial Advice NZ supported increased funding to ensure we have a strong regulator, we are disappointed that almost the full cost of the increase is being borne by the sector.”
Over the next three years the FMA’s annual budget will rise from $46 million to $60.8 million in the 2022/23 year.
MBIE says the FMA has faced increasing cost pressures and an expanding regulatory remit and responsibilities, particularly in relation to preparing for the new financial advice regime. The Government has delayed the new financial advice regime’s start date by more than eight months to early 2021 due to Covid-19. It was due to be introduced in June this year.
|
Year |
Increase |
Total FMA appropriation |
|
2020/21 |
$12.5 million |
$48.5 million |
|
2021/22 |
$17.5 million |
$53.5 million |
|
2022/23 |
$24.8 million |
$60.8 million |
An MBIE policy decision document for Minister of Commerce and Consumer Affairs Kris Faafoi says that when consultation with the financial services community was undertaken on changing the levies, the vast majority of submitters said the Crown should maintain at least its current percentage of the FMA’s funding (25%).
The Cabinet paper reads: “As a result, there may be a strong reaction from financial services providers about any levy increase at all, especially given the Crown will be reducing the portion of the FMA’s funding it pays.”
…there may be a strong reaction from financial services providers about any levy increase…
In addition, the report says there is a risk that an increase in the levy on the financial services sector will put additional stress on financial services businesses in the context of Covid-19.
The report writer says: “However, in addition to phasing the FMA’s appropriation increase over three years, most financial services are essential services and are continuing to operate in some form.
“I believe these factors, when combined with the Government’s other Covid-19 business support measures should sufficiently minimise the potential impact of higher levies on financial service providers.”
MBIE says while levies from 1 July 2020 have been set, work continues on the amount of levies for 2021/22 and 2022/23, along with the levies required for the recently delayed financial advice regime.
Wage subsidy
Elsewhere in the the 2020 Budget, Finance Minister Grant Robertson said the wage subsidy scheme will be extended by eight weeks for businesses who have suffered, or expect to suffer, a 50% reduction in income for the month prior to application compared to the nearest comparable period last year.
Businesses wanting the additional subsidy will need to apply for it, applications open 10 June and businesses have 12 weeks in which to apply.
The government has also created a $50bn Covid-19 response and recovery fund to invest in the economy.
So far around $15.9bn has been allocated to initiatives intended to grow and support jobs, training and infrastructure. The $50b isn’t a target level of expenditure, but a fund available if required for the country’s response to, and recovery from, Covid-19.