Tate said some of the proposed funding structures outlined in the Ministry of Economic Development (MED) discussion paper – which could see AFAs face annual levies of as much as $1,715 – are “inherently imbalanced” against advisers as the 797 AFAs (to date) are “the smallest group that would benefit.”

The MED’s favoured option is for a combined FMA/FAA levy that would see AFAs operating through a limited liability company charged $1,715, RFA sole traders $1,140 and QFEs $69,435.

Tate said the IFAs favoured option in the MED paper was option four, a $40 levy on “all companies, limited partnerships, building societies, credit unions, industrial and provident societies, friendly societies and contributory mortgage brokers.”

He said the IFA would make an official submission and he expected there to be “thousands of submissions” from AFAs and RFAs concerned about the significantly higher levy options.

Tate said he believed the cost of funding the FMA should be spread evenly across all financial market participants as the market as a whole is set to benefit from the mooted increase in investor confidence the FMA is to usher in.

The MED paper also highlights the wider spread of costs a combined FMA/FAA levy would result in.

“The main advantage of a combined levy is that it would dramatically reduce the amount payable by each FAA entity or individual.”

However, the MED also outlined why the combined levy was not its preferred option - an argument that flies in the face of Tate’s main point that if regulation is to benefit the whole market, all participants should fund it.

“Although its is administratively simple, distributing the costs of FAA regulation across a broader group does not reflect the objective that: those benefitting from regulatory functions provided, or contributing to risks that warrant a regulatory response, should bear the costs of those regulatory function.”

Ultimately Tate said higher regulatory costs could also force more advisers out of the market.

“I don’t see how that’s going to encourage confidence,” he said.