FMA chief turns watchdog on its head

Financial Markets Authority chief executive Sean Hughes Photo / Mark Mitchell

Financial Markets Authority chief executive Sean Hughes announced sweeping changes to the organisation yesterday that will see it run along corporate lines rather than the public service model followed by its predecessor, the Securities Commission.

Up to 20 jobs inherited from the Securities Commission, including seven in the leadership team, will be "disestablished". The new structure will come into force on July 1.

The FMA starts advertising the new positions, which will reflect the FMA's wider responsibilities and powers, today.

"It's not dissimilar to the sort of model you'd see in a corporation or bank," Hughes told the Weekend Herald.

The leadership team will still comprise seven jobs, but the team members' roles will be different.

The FMA is looking to increase its total headcount from the present 75 to 120 in the next two to three years. Half the leadership team will be based in Auckland.

The team will represent the FMA's seven main areas - enforcement, compliance, regulatory operations, market intelligence, communications, back office functions and legal governance.

But Hughes said the Securities Commission did not have a designated enforcement team.

"It's a key area of priority for us in terms of dealing with the backlog of cases we've inherited, and more actively and aggressively targeting misconduct in the future," he said.

The compliance team, another area that the Securities Commission did not have, will monitor commercial and infrastructure areas - the NZX, trustees, auditors, exchanges and clearing houses, plus large entities such as banks and insurers.

Hughes said this part of the operation would be "looking across the larger end of town", and would be based in Auckland.

Regulatory operations will be the FMA's "shop window" where people wanting to register as a new KiwiSaver provider, or be authorised as a financial adviser, will go.

Its market intelligence function, based in Auckland, will include analysis of information, new trends and risks and shareholding functions.

The communications function will liaise with media and other regulators, such as the Reserve Bank, the Serious Fraud Office and the Retirement Commission.

The remaining roles will be the back office operations, and the FMA's own legal governance.

In a separate move, Hughes has taken a big knife to staff perks, which included massages and Christmas gift packs, saying he had become concerned at how expenditure on such items would look in public.

Perks being axed included staff farewells and family-related gift tokens. The cost of these perks and others came to $60,000 - the equivalent of one salary a year, he said.

"It's debatable whether many of these items ought to be provided by an employer," he said.

Meanwhile, Commerce Minister Simon Power yesterday released a discussion document on third-party funding options for the FMA, the External Reporting Board, the Companies Office, and the Insolvency Trustee Service. The paper proposes two levies to cover the cost of these extra functions, and of administering the Financial Advisers Act.

The FMA is loosely modelled on the Australian Securities and Investment Commission, which is largely self-funding.

Shake-up

* Up to 20 FMA jobs to be "disestablished".
* Headcount to eventually rise to 120 from 75.
* Half the leadership team to be Auckland-based.
* New funding formula proposed.