The country's leading financial market regulator is facing jobs cuts which may weaken its ability to protect investors.

RNZ has been told that a proposal put to staff on Wednesday has proposed that more than 20 jobs may be axed from the Financial Markets Authority (FMA) as it looks to save costs.

The authority's standing in financial markets has slumped in the past year, with its own survey showing growing scepticism about its ability to do its job or even connect with markets about what matters the most.

Like all government agencies, it has been told to save money and that has opened internal debate on whether to pursue and prosecute financial bandits - an area of some success in the past year - or concentrate on broader policy issues.

Sources within the FMA told RNZ of deep differences and factionalism within the FMA about what path a slimmed-down regulator should follow - differences heightened by the departure of former Commerce Minister Andrew Bayly.

In a statement, the authority said: "The FMA has begun a focused consultation on proposed changes that mostly affect our enabling function, Transformation and Operational Delivery, and will have little impact our frontline supervision and monitoring teams.

"Our focus is on working through the proposal with affected staff at this time.

"The proposed changes will enable us to continue to further develop our aim of being a data and intelligence led organisation, while ensuring fiscal sustainability."