SecCom seeks more staff & money

The Securities Commission says it needs twice as many staff and more money as it gears up to regulate financial advisers.

In its statement of intent for 2009-10 the commission forecasts a loss of $1 million and says the Ministry of Economic Development has hired accounting firm KPMG to review its baseline funding.

The commission, whose staff numbers have already doubled to 44 since 2002, says it's likely to need to double this number again.

Under the Financial Advisers Act and the Financial Service Providers Act the commission will be the central regulator overseeing financial advisers.

The two acts are aimed at introducing a minimum standard of competence for financial advisers and come after advisers - and the commission -were heavily criticised for their role in the collapse of dozens of finance companies, which put billions of dollars of investors' savings on the line.

Last week's budget granted the commission an extra $11.8 million over four years.

But the commission says its new responsibilities have necessitated a reassessment of its base infrastructure.

"The likely doubling of staff numbers, the possible opening of an Auckland office, and the need for computer systems to deal with authorisation and monitoring of financial advisers requires the commission to reshape significantly."

Much of the commission's new responsibilities are expected to be funded on a user pays basis with industry fees and/or levies introduced. Ahead of this the MED has also asked KPMG to review commission fees.

The new financial advisers' regime is expected to be implemented by the end of 2010.

After several years of building up reserves the commission is forecasting deficits for 2008-09 and 2009-10 as its work load increases.

The commission's 2009-10 forecast income is $10.4 million - up from $8.8 million in 2008-09 - which is dominated by a $9.1 million government grant. However, expenses are expected to rise to $11.5 million from $9.2 million with personnel costs climbing $1.6 million to $6.9 million

Meanwhile, among its key priorities for the upcoming year the commission lists finance company enforcement to deter bad practices and market misconduct. It also notes that with the world in the grip of a financial crisis, New Zealand's securities markets are under stress and investor confidence has taken a hit.

"In this context the commission's priorities for 2009-2012 aim to restore and maintain investor confidence in the regulatory environment."