FPA concerns over ASIC funding model
The FPA has provided Treasury with its submission on the proposed industry funding model for ASIC. In its submission, the FPA has highlighted its concerns about the equity of the proposed model, particularly in respect to its impact on small licensee businesses.
In its submission, the FPA has recommended that Treasury consider reworking the industry funding model for ASIC, including:
- The model to appropriately reflect ASIC's activity that is necessary to oversee the risk posed to consumers based on the scale of the advice operations and other risk factors.
- Comply with Government policy regarding small business.
- Ensure the funding model is linked to the larger reform agenda, particularly the FSI, PJC Inquiry, and the ASIC Capability Review.
As part of its submission, the FPA has recommended that ASIC's annual funding levy be made up of two parts:
A. Part A — a revised model that is equitable across the financial services industry and supports the role of small business.
B. Part B — an overlay of risk-based concessions that incentivise professional behaviour and encourage businesses to reduce their consumer risk, and the regulatory activity required by ASIC.
The FPA has also recommended that licence fees related to AFSLs reflect the scale and complexity of the financial advice operations of the business and therefore, the resources by ASIC required to assess the application.
For example, the FPA believes the model could consider a licence fee range that separates the issuing of products versus no product. In addition, the FPA recommends there could also be alternate segmentation that could help in scaling the licensing fees.
In terms of the introduction of an industry funding model for ASIC scheduled for the 2016-17 budget year, the FPA has voiced its concerns about the impact of the timing of the proposed new costs, particularly for small licensee businesses. As such, the FPA has called for any introduction of an industry funding model for ASIC to be delayed by at least 12 months, with the funding model then introduced in stages.
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