How much you will pay to fund the FMA

Authorised Financial Advisers (AFAs) will have to pay $400 and Registered Financial Advisers (RFAs) $350 in annual levies to fund the Financial Markets Authority (FMA).

Thursday, June 7th 2012, 12:18PM 6 Comments

by Benn Bathgate

The fee structure has been broadly welcomed by both the Institute of Financial Advisers (IFA) and the Professional Advisers Association (PAA).

"Generally speaking it's about where we expected it to be," said IFA president Nigel Tate.

"Their initial figure was $1,800, I think they heard from the profession that that was unacceptable."

Tate said that with added company levies he expected AFAs would pay in the region of around $537 annually.

PAA chief executive Edward Richards said the levies were an acceptable outcome.

"When we met with [Commerce Minister] Craig Foss earlier this year with other associations he said the levies would not spring a major surprise, so I think in the circumstances the PAA is reasonably comfortable with the outcome," he said.

Edwards said that while additional costs were never welcome, the industry accepted occupational licensing fees were part of professionalism.

"We are naïve to think we can proceed without some degree of costs on the industry, but some of these fees and levies will be passed onto financial services consumers," he said.

As well as announcing AFA and RFA fees the Minister revealed banks annual levies will be between $2,000 and $350,000, insurers between $2,000 to $150,000 and Contributory Mortgage Brokers $2,000.

Foss said the FMA fees would raise $16.4 million from financial services providers in funding for the FMA.

"The new levy and fee structure will help fund a well-regulated market that all investors can trust," he said.

The new fees and levies will apply from 1 August 2012.

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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Comments from our readers

On 7 June 2012 at 8:23 pm Ron Flood said:

I feel very sorry for the banking fraternity. The $350,000 fee based on an asset value of $50 billion dollars is a hardship they may not recover from.

In my case, the $350 fee I am required to pay as a Registered Financial Adviser must mean I have an asset base of $50 million dollars. I wish.

On 8 June 2012 at 11:35 am Andy said:

I agree Ron. They didn't mention the additional new costs we are already burdened with - registration fees for the Resolution disputes scheme, registration costs, and all the other affiliation fees associated with proving professionalism. I am beginning to think the only ones making money are the industries on the other side of the desk - the education facilities, adviser groups, and industry watchdogs - all wanting their pound of flesh.

Does the consumer really have any better protection yet? They may have access to better advice, but at a cost to them now...

On 8 June 2012 at 12:38 pm Lindsay said:

Well here is the list I received and I don't see $350 there at all. I see $400 for AFA and $2000 for RFA. Please show me where I am wrong

Providers of other financial services (Class 6 in the Regulations)

Exchange participants as defined in section 2(1) of the Securities Markets Act 1988, excluding public issuers and natural persons.
Levy payable $7,500

Contributory mortgage brokers (as defined in section 2(1) of the Securities Act 1978)
Levy payable $2,000

Financial Service Providers (FSPs) registered for the financial service described in section 5(k) of the Financial Service Providers Act 2008
Levy payable $2,000

Authorised futures dealers (as defined in Regulation 3)
Levy payable $2,000

Brokers (as defined in section 77a of the Financial Advisers Act 2008)
Levy payable $1,000

Authorised financial advisers (as defined in section 5 of the Financial Advisers Act 2008)
Levy payable $400

On 8 June 2012 at 3:07 pm DFA - Directory of Financial Advisers said:

Lindsay - you can't easily find it on FSPR but it reads: Class 7 - Registered financial service providers who are not included in any other class of specified persons above - Levy payable $350

I hope that helps

On 8 June 2012 at 4:16 pm Lindsay said:

Thanks DOFA
I think everyone might classify as Class 7 but I really cannot see how. Are you a broker - most are. Are you an FSP - Yes also - So how then are people "other"
I have emailed the PAA as they are quoted but more importantly I have emailed info@fspr.govt.nz Just because the cost is $350 doesn't mean FSPs and Brokers (class 6) are Other (Class 7)Hope I am wrong because class 7 $350 sounds way better than class 6 $2000

On 8 June 2012 at 4:53 pm Amused said:

Well said Andy. Regulation to date seems to have been focussed on revenue gathering from adviser’s pockets instead of actually improving ethics and behaviours. I see also that the cost of PI cover for advisers has almost doubled from last year. With the introduction & compulsory membership of dispute resolution schemes doesn’t it mean the actual likelihood of a claim arising and been paid is even less likely now? I thought PI premiums were calculated in part on risk to the insurer paying a claim?? I would be VERY interested to know the stats for how many PI claims were actually paid out to clients in the last 12 months… Anyone have any insight to this? Nice perhaps if PI insurers said to advisers in future “you’ve had no claims against you for the last 15 years so we’ll discount your premiums this year accordingly” Too much to ask?

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