It published its annual report for the 12 months ended June 30 yesterday.

During the period, the regulator started implementing the Financial Markets Conduct Act, described as the largest statutory change in financial services in the past 30 years.

Chief executive Rob Everett said after its third full year in operation, the FMA was established as a respected regulatory.
“Our focus remains on building confidence in the robust framework that supports the financial markets. We’ve built our capability, processes and expertise so we can administer the FMC Act over the long term.”

He cited undertaking extensive monitoring of advisers as an achievement in its role, and the new code of conduct for advisers.

“Financial advisers are a priority area of focus for our team. This is because New Zealanders need access to advisers who can provide quality advice that is appropriate to the products or services they are buying, or the investments they are making.”

The report said the FMA was managing its finances prudently because it anticipated ongoing pressure on staff numbers and capital expenditure on systems to support staff.

“This pressure includes increased monitoring of markets and our interactions with participants as the FMC Act takes full effect over the next two to three years. In turn, we will be subject to a steady demand on our funding, including our accumulated funds.”

The FMA’s income in 2014 was $31.2 million, including a Government grant, interest and third-party revenue from directly-provided services. This was $400,000 ahead of budget due to new fees introduced for reviews of audit firms.

Total expenses were $29.4 million, slightly lower than the budget of $29.7 million.

“Our personnel costs, which are our single biggest area of expenditure, were 8% over budget at a total of $19.3 million. This was due to the additional staff we hired, many of them with highly sought-after financial markets and ICT skills. These skill sets are required to implement the FMC Act.”

FMA spokesman Andrew Park said the further implementation of other aspects of the FMCA, such as DIMS licensing for advisers, would not put undue pressure on the FMA’s finances. “The FMA has been preparing for the implementation of the FMC Act for the last 18 months and this work will continue for the next two years at least. We have been resourced appropriately. Our mandate has increased and as well as licensing AFAs we have been taking on responsibility for much broader populations within the markets. We have built our capability to deal with this and do not have concerns about the levels of funding available.”

In the year to June 30, the FMA received a total of 2701 inquiries and 839 complaints.  Inquiries related primarily to the implementation of the FMCA and AML regulation.