Commerce and Consumer Affairs Minister Kris Faafoi says the Financial Markets Authority’s annual litigation budget is being increased by $4 million to $6 million to boost its ability to take legal action when required.
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. 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," says Faafoi.
“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."
Increasing the litigation fund means the FMA will be "well-prepared to act as a proactive regulator" of NZ’s financial markets, Faafoi adds.
“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.
The litigation fund is there so the FMA's always able to begin or continue legal proceedings. It covers all direct external costs incurred from the time external or internal legal counsel are engaged ahead of potential litigation.
The litigation fund is financed by the Crown (taxpayers), whereas the FMA’s operational budget is funded through a mixture of Crown funding and levies on the industry it regulates. Any unspent money from the litigation fund is returned to the Crown at the end of each financial year.