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Financial regulation near 'tipping point'

NZ Newswire logoNZ Newswire 3/04/2017 Paul McBeth

The expansion of regulatory regimes and increased budgets to enforce them may have pushed the balance of government oversight to a "tipping point" where the costs start outweighing the wider public benefits, Chapman Tripp says.

The law firm expects more proactive regulatory intervention by agencies including the Commerce Commission, Financial Markets Authority, Serious Fraud Office, Inland Revenue, and Overseas Investment Office, which have all received bumps in funding to pay for increased demands by the government to keep tabs on the market.

In a trends and insights paper on dispute resolution, Chapman Tripp notes "increasingly proactive regulatory intervention" in 2016 is likely to continue this year.

Policymakers will keep pursuing more regulation in the near term, which will ultimately lead to that regulatory burden being passed on to consumers, partner Victoria Heine told BusinessDesk.

"They've been given the legislation by parliament for a reason - they've now been given the money to enforce that legislation so it's not surprising that they want to get on with it," Ms Heine said.

"We're at a tipping point and there must be a point at which regulation goes beyond what's necessary to protect markets and protect consumers and create a cost in and of itself."

The National Party-led administration has opposed increased regulation since election in 2008.

However, there's been a worldwide push to boost regulation after the 2008 financial crisis. The shift towards digital services has also created new demand for regulatory responses.

Ms Heine said she would be watching for consistency and transparency in regulatory decision-making and wants regulators to weigh up the commercial context of their rulings rather than just pursuing technical breaches.

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