Financial Markets Authority warns it may run out of money for legal cases
Photo:
123RF
The country's leading financial market watchdog has warned it might run out money to take legal cases, undermining its regulation of markets.
In its recently published statement of
performance expectations
, which sets out its performance targets for the coming year, the Financial Markets Authority (FMA) said it had blown last year's (2024/25) legal fighting fund.
It said legal costs for the just ended year were about $6.7 million compared to its budget of $5 million, but the overspend could be covered by unspent reserves from the 2023/34 year.
However, it said pressures were already expected for the newly started year.
"With multiple cases in the pipeline, forecast litigation expenditure for 2025/26 is expected to exceed the annual litigation funding appropriation of $5 million."
However, the report said there would be no reserves available to cover any overspend, and that might affect its ability to take legal action.
"This presents a significant risk," it said.
"Insufficient funding may limit our ability to progress existing cases or initiate new ones, potentially impacting our regulatory effectiveness in financial markets," the report said.
It said it was looking at options with the Ministry of Business, Innovation and Employment (MBIE), which included securing additional funding or reprioritising litigation activities within the existing budget.
Overall, the FMA report said it expected to record a sharply reduced annual deficit of $1.75m compared to $7.31m in the year just ended.
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