The FMA will incorporate a range of existing regulatory powers including those of the Securities Commission
Industry commentators have welcomed plans by the Government to form a new "super regulator" but some fear it could lead to a more heavy-handed approach for business.
Commerce Minister Simon Power announced plans on Wednesday night to set up a new body called the Financial Markets Authority (FMA) in a bid to restore investor confidence in the wake of the finance company collapses and the global financial crisis.
The FMA will incorporate a range of existing regulatory powers including those of the Securities Commission, some duties performed by the Companies Office and the disciplinary arm of the stock exchange.
It is expected to be up and running by the start of next year ahead of a review of the Securities Act.
New Zealand Shareholders Association chairman Bruce Sheppard, who has campaigned strongly for a single regulator, said his group had got pretty much everything it wanted.
"This is a once-in-40-year event. It's an opportunity to build a world-class environment."
Financial commentator and fund manager Brian Gaynor said he felt very positive about the changes.
"We have been waiting a long time for this to be cleaned up.
"So many things have just fallen through the cracks."
Rob Cameron, chairman of the Capital Markets Taskforce, which recommended implementing a single regulator, said he was surprised by how fast the Government had moved towards setting it up.
"If I had been asked in December, when we delivered our recommendations, how long it would take the Government to do that, I would have expected that sort of policy announcement by the end of the year, so it's well ahead of schedule."
Financial writer and Capital Markets Taskforce member Mary Holm said a super regulator would help to stop undesirable financial practices from disappearing through the gaps that exist between the current regulatory bodies.
"Obviously it's going to depend on how it's resourced, who's running it and all of that sort of detail. They're going need to have money and they're going to need to have power," she said.
ANZ New Zealand chief executive Jenny Fagg said the FMA was a welcome consolidation of regulators but she was worried about an over-reaction on regulations as a result of the global financial crisis.
"We are worried about regulation for the sake of it."
Power also announced changes to tighten up the governance and reporting for KiwiSaver, which will also come under the new regulator.
Holm said she was supportive of regular information on fees, performance and asset holdings being supplied by KiwiSaver providers to the public in a comparable form.
"The point is that hopefully within a year or two, people will be able to look at [KiwiSaver information] in a comparable form."
But David Ireland, chairman of superannuation industry body Workplace Savings, said he was concerned about more regulation being placed on KiwiSaver "for the sake of it".
"If the regulation actually does produce a better outcome, then that's good, but again I guess we need to look at the detail and hope that there will be a good engagement with industry in rolling [the new regulations] out."
