Banks pay big fees to fund FMA

The big banks are paying the lion's share of levies to run the Financial Markets Authority. Photo / NZ Herald

The Government is making the finance industry cough up cash for the watchdog that regulates it and the biggest banks will pay the most.

A range of levies will raise $16.4 million per year to fund investment regulator the Financial Markets Authority and a further $3.66 million to fund the External Reporting Board which oversees accounting standards.

The Financial Markets Authority was set up in 2011 to replace the Securities Commission and take on new regulatory responsibilities. The Government funded its first year to the tune of $15.32 million but will drop its annual contribution to $11 million from July 1.

The levies will mean the regulator is 60 per cent funded from the industry.

Commerce Minister Craig Foss said yesterday that the new levy and fee structures would help fund a well-regulated market.

"It's important that our regulators are properly resourced."

Foss said it had consulted widely on the levy system and he was confident the Government had struck the right balance.

But the move has been met with disappointment from the banking industry which will shoulder much of the costs. Banks and non-bank deposit takers with assets of over $50 billion will have to pay $350,000 annually.

New Zealand Bankers' Association chief executive Kirk Hope said it had no issue with an industry contribution to FMA costs but the levy was disproportionate to the benefits received.

"One of the principles of the levy model design was that levies be proportional to benefits received," Hope said.

"The approach announced today does not reflect that principle well.

"Banks are well-regulated responsible lenders operating at the top end of the market.

"The levies should better reflect the costs and benefits where they actually fall."

Large insurers will also face a hefty fee with companies with a gross premium income of over $250 million being levied at $150,000 annually.

While trustees and statutory supervisors and specified managed funds will face levies of up to $100,000.

Those who raise money from the public will also face a $2000 prospectus fee registration increase adding to the existing cost of $327.

Financial Services Council chief executive Peter Neilson said the prospectus fee would add costs but he doubted it would put companies off raising money.

"Obviously it adds an additional cost but there are also benefits to having a stronger regulator," Neilson said.

It was hoped the FMA would bring confidence back to the investing public, he said.

The new levies apply from August.

The minister also announced changes to fees for the Companies Office, dropping the new company registration fee from $153 to $150 but introducing a new annual reporting fee of $45.

Both fees include a $10 contribution to the FMA and a further $10 to the External Reporting Board.

The new fees are expected to help pay back an $11.2 million operational deficit at the Companies Office by the end of 2014.

FMA ANNUAL LEVIES

Banks: Between $2000 and $350,000

Non-bank deposit takers: $2000 to $350,000

Insurers: $2000 to $150,000

Licensed trustees and statutory supervisors: $5000 to $100,000

Specified Managed Funds: $2000 to $100,000

Contributory mortgage brokers: $2000

Financial Service Providers offering broking services: $1000

Authorised Financial Advisers: $400

Fees can vary depending on assets, selection of fees presented