The Financial Markets Authority (FMA) will establish a new top table executive role with oversight of the local investment industry.
With funding set to increase by about $7 million this financial year, the FMA is now able to splash out on senior staff including the imminent director of investment position.
In a recently released job description, the regulator says the director of investment “will head up a function housing the FMA’s Investment Management subject-matter experts responsible for designing, delivering and communicating the FMA’s approach to the Investment Management Sector”.
Reporting to FMA chief, Rob Everett, the director of investment will be in charge of a new team in the now-flush regulator with responsibility for the managed investment scheme (MIS) and KiwiSaver industry.
“This position has been created to reflect the FMA’s role in working closely with KiwiSaver and MIS providers and relevant industry associations to ensure the FMA has strong influence over and a good understanding of key issues for the industry,” the job ad says.
Among a long list of duties, the to-be-confirmed director of investment will be charged with designing the “FMA’s regulatory strategy for investment management and KiwiSaver, including ‘regulation by communication’”.
Specifically, the new investment director will drive a range of initiatives in the buffed-up FMA camp including an upcoming climate change and environmental, social and governance (ESG) strategy, product design and labeling (such as active or passive funds) rules, and the regulatory program for the new default KiwiSaver regime.
Delayed by about five months by the coronavirus upheaval, prospective default KiwiSaver providers will be asked to tender under the new provisions revealed by the government in March. In addition to moving default investment settings from conservative to balanced, new KiwiSaver default providers will have to remove exposure to fossil fuels while also clamping down further on fees.
The industry awaits further detail on the default tender process with final appointments penciled in for November 2021.
More information is also pending on the recent FMA-commissioned review of active and passive investment among KiwiSaver and MIS providers. Consulting firm MyFiduciary filed a report with the regulator on the active-passive issue earlier this year as part of the FMA’s ‘value for money’ push – a program that will also fall under the purview of the director of investment.
The job description says the new role will involve: “Ownership of the FMA’s view and process to regulate and influence ‘value for money’ in the Investment Management Sector including the development of tools, metrics and a communication plan for evaluating and reporting on value for money in the sector.”
Applications are due in by July 12.
As of the 2020/21 tax period, the FMA budget has officially jumped by more than $12 million, however, the regulator ran a $5 million plus deficit in the previous year.
In the regulator’s latest statement of intent released last week, Everett and FMA chair, Mark Todd, write: “We welcome the Government’s recent decision to provide the FMA with additional funding of $24.8 million to be phased over the next three financial years (starting with $12.5 million in 2020-21). “This additional funding leaves us well-placed to be an effective and efficient regulator, successfully navigate the expansion of our remit, and continue to focus on our priorities while responding to significant events such as the impacts of COVID-19.”
FMA employee costs are booked to increase from $29.6 million in the last financial year to almost $33 million in the latest annual period.
Government tips in about 25 per cent of the FMA annual funding with the balance provided by industry levies – many of which are set to rise, including for MIS managers, under a new schedule released in May.