A Financial Adviser Act levy on AFAs, RFAs, QFEs and the advisers they are responsible for is one of the options outlined in the Ministry of Economic Development discussion paper on funding the FMAs $26 million budget.

Other proposals include an FMA levy on either financial service providers and certain issuers, an FMA levy on all companies and other entities or a combined FAA/FMA levy on all companies and other entities.

When the Financial Advisers Act was passed, Cabinet decided that the associated regulatory work, which costs the FMA around $6.2 million per year, would be fully third party funded.

Fees are charged under the FAA for the authorisation of financial advisers and other direct services, and an FAA levy "will recover the portion of the appropriation that is not covered directly by the FAA fees revenue," the paper says.

The paper outlines a number of varied levy structures with differing levels of fees.

Under the one of the proposed FAA levy structures, charges of $680 will apply to AFAs not associated with a QFE, AFAs associated with a QFE and QFE Category One advisers.

QFEs will be charged $8,000, QFE Category Two advisers and RFAs $140.

The outline for a combined FAA/FMA levy - the preferred option - would see AFAs operating through a limited liability company charged $1,715, RFA sole traders $1,140 and QFEs $69,435.

The FMA proposals includes two options, the preferred option of a $910 levy for all financial service providers under the Financial Service Providers (Registration and Disputes Resolution) Act 2008, or a $20 levy on all companies, limited partnerships, building societies, credit unions, industrial and provident societies, friendly societies and contributory mortgage brokers.

The document says the fee levies was worked out after the March 31 registration deadline when numbers of AFAs and QFEs were better known.

In support of its levy assumptions, the paper approximates the number of AFAs as 720, AFAs associated with a QFE (1,180), RFAs (5,000), QFEs (75), QFE Advisers Category One (3,500) and QFE Advisers Category Two (20,000).

The document also outlines how product complexity was a guiding factor is setting the levies.

"The preferred basis for charging the FAA levy is either per adviser or per entity, and the amount of the levy is varied. Where the FAA levy is applied per adviser, the amount of the FAA levy reflects the regulatory costs relating to the risks associated with the complexity of the products advised upon, and not the organisational structure within which the individual is providing the advice."

Citing the "uncertainty inherent in introducing fees and levies to fund new Government services" the document says any fee and levy options arising from the proposals will be reviewed two years after implementation, "once the number of entities levied and the regulatory and operating changes have been more firmly established and their costs are clearer."

Download FMA FUNDING DISCUSSION DOCUMENT