Financial Advice NZ welcomes Budget 2020

New budget highlights "rebuilding together"

Financial Advice NZ welcomes Budget 2020

The New Zealand government has released its budget for 2020 to 2021 – and the Financial Advice New Zealand rejoices as the budget could help financial advisers impacted by the COVID-19 pandemic.

The $50 billion COVID-19 Response and Recovery Fund (CRRF) aims to rebuild the economy and society, with $3.2 billion allocated for the extension of wage subsidy for another eight weeks.

Katrina Shanks, the chief executive officer of the Financial Advice New Zealand, commented that the budget would benefit some financial advice companies hit by the pandemic.

“I think there will be a range of advisers who qualify with a 50% drop in revenue. Whether that falls within the period of time they can apply will depend on their business,” Shanks told Good Returns, adding that adviser sector would most likely experience a decline in revenue later than other sectors because of its structure.             

Read more: COVID-19: Reserve Bank predicts 150,000 job losses

Meanwhile, the government increased the Financial Markets Authority (FMA)’s annual operational funding appropriation by $1.304 million and litigation fund by $3 million, and the Crown will provide 21% of FMA funding from 2020 to 2021.

A spokesperson for the FMA said they welcome the additional funding as the pandemic continues to increase market stress and conduct risks.

“The need for an appropriately resourced conduct regulator at this time is clear. The increase will enable the FMA to continue its work and prepare for the new financial advice regime. No funding was previously allocated to enable the FMA to prepare for the new financial advice regime,” said the FMA spokesperson, as reported by Good Returns.

“The largest number of submitters in the consultation on the FMA’s funding and levies earlier this year supported the option with the highest level of funding for the FMA. In general, [the] industry was supportive of an appropriately resourced and competent regulator, with no doubt that the FMA needed more funding to fulfil its objectives and expanded remit.”