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Effectiveness and managing organisational health

The Commission has set a main financial measure for the period of this Statement of Intent, which aligns with the Value-for-Money Development Goal for the State Services.

Preparing for the effects of new law

The Financial Advisers Act introduces new responsibilities which will have a profound effect on the work and structure of the Commission. A key focus for the Commission is to bring this regime into operation as soon as possible as early implementation is important to restore investor confidence. The Commission has been consulting with the industry and the education sector, both of which will play a key role in assisting with implementation.

This Statement of Intent also identifies several intended reform programmes that are expected to affect the Commission and the scope of its role and functions (see Legislative environment).

A challenge for the Commission in the term of this Statement of Intent will be to continue to meet its current objectives while ensuring that it fulfil its new roles.

Risks and risk mitigation

The Commission developed a risk management framework following a study by external consultants in 2004. This identified the key areas of our capability and risks to these. The main risks relate to staff (recruitment, key personnel, and retention), physical event/disaster, reputation, confidentiality of information and knowledge available. The Commission has developed responses to these as described below.

Staff

Staff numbers have increased from 22 in 2002 to 44 in 2009. A risk for the Commission is that it may not be able to recruit suitably qualified staff. The Commission counters this by boosting graduate recruitment, intensifying overseas recruitment, and targeting New Zealand recruitment campaigns effectively. To date the Commission has managed to recruit as required for its increased responsibilities.

We seek to minimise the risks associated with retention of staff by our commitment to being a good employer. The Commission was placed 13th in the small employer category (up to 49 staff) of the Unlimited/JRA Best Places to Work in New Zealand Survey in 2008. We use this to measure our organisational health and our performance as an employer. Staff complete anonymous surveys under the headings:

Our objective over the next three years is to keep our status as a good employer by continuing our values-based culture, maintaining high professional standards, being responsive to staff feedback, and continuing the human resource practices that have proven effective. The Commission will continue to use the Unlimited/JRA Best Places to Work in New Zealand Survey to measure its performance as a good employer.

Physical event/disaster

The Commission's offices are code compliant under section 95 of the Building Act 2004. Our earthquake and disaster plan includes emergency food, water and first aid supplies, staff trained in first aid, and document and IT recovery systems. Some staff have access to the Commission's computer network enabling them to work from home.

Reputation and integrity

The Commission promotes high ethical standards in the securities markets. If it is to succeed in this, and thereby strengthen confidence in the integrity of New Zealand's capital markets, it is essential that people have confidence in the integrity of the Commission itself.

The Commission must maintain a good reputation both for quality of work and integrity of approach. Much of our work is highly sensitive and confidentiality must be maintained. These risks are managed through the Values and the Code of Ethics we have adopted as an organisation.

The code of ethical standards and behaviour expected of Commission Members and staff is published at www.seccom.govt.nz/about/code-of-ethics.shtml

The setting and publishing of these values and standards, and monitoring compliance by Members and staff, aligns with:

• the Reputation Indicator of Government's Employer of Choice Goal for the State Services; and
• the Trustworthiness Exhibited by State Servants Indicator of Government's Trusted State Services Goal.

Confidentiality of information

To mitigate risks relating to confidentiality of information, staff and Members sign a confidentiality agreement when starting work with the Commission. The importance of confidentiality of information is stressed in the recruitment and induction processes. Security around IT systems and files is robust and effective physical security is in place at the Commission's office particularly as capacity expands to handle financial adviser responsibilities.

Knowledge available

The Commission's document management and records systems make institutional knowledge available and the induction processes explain how to access these. The Commission's team structure is conducive to effective knowledge sharing.

Collaboration on organisational health and capability building

The Commission continues to collaborate with these agencies for its organisational capability and health initiatives:

• the State Services Commissioner, for its six Development Goals for the State Services; and
• the Equal Employment Opportunities Unit of the Human Rights Commission for its Good Employer Guidance under the National Equal Opportunities Network.

Financial control and acquisition processes

The Commission has policies for expenditure, financial delegations, and acquisitions. The financial delegation policy requires all expenditure to be within set delegations, or subject to prior approval by the Commission. Detailed planning and management procedures based on the Auditor-General's guidelines must be followed for significant acquisitions and for planning and managing litigation expenditure.

After several years of building reserves, the Commission is forecasting deficits for 2008/09 and 2009/10 to fund greater work on its existing class of outputs. The deficits will fund greater operational workloads arising mainly from financial reporting, increasing complexity of matters, international recognition and risk management. For the litigation fund, the Commission is forecasting expenditure within appropriation.

Review of baseline funding

With the Commission's increased functions and its new role related to financial advisers, the Ministry of Economic Development has retained KPMG to conduct an independent review of the Commission's baseline funding. The review is intended to ensure that the Commission has the required resources to carry out the functions required of it under existing and new legislation.

The expanded responsibilities for the Commission arising from the Financial Advisers Act have necessitated a reassessment of the Commission's 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 require the Commission to reshape significantly. Importantly, much of this is intended to be funded on a 'user-pays' basis with industry fees and/or levies being introduced. In preparation for this MED has also retained KPMG to conduct a review of Commission fees.

The Financial Advisers Act implementation has funding implications beyond the Securities Commission and its Vote Commerce appropriation, affecting other commerce related agencies. There are funding implications for the Registrar of Companies for the registration infrastructure, the Ministry of Consumer Affairs for a dispute resolution framework and the NZQA for realignments in the tertiary education system for providing competency assessment and training services across the country.

Takeovers Panel

The Commission provides administrative and support services to the Takeovers Panel in accordance with the Securities Act and under the terms of an MOU. For each financial year the Commission and Panel agree on the level of services required and on the fees to be paid for them. The income received from the Panel and the costs of providing these services are included in the financial statements. When it has secured extra funding, the Panel will relocate to separate premises at which time the shared operating arrangements currently in place will cease. This is expected in 2009/10.

Consultation and reporting to the Minister of Commerce

The Minister of Commerce is the Commission's responsible Minister, and the Ministry of Economic Development is the monitoring department.

The Commission acts independently of Government and others except as required by the Securities Act 1978 or the Crown Entities Act 2004.

There are no matters on which the Commission is required to consult or notify the responsible Minister before exercising its statutory functions and powers. However, we work with the Minister and Ministry in accordance with our statutory functions and powers on policy, regulatory matters, law reform and appropriations.

The Commission consults with the Minister on the preparation of the Statement of Intent, and reports to the Minister quarterly and in the annual report.