Greater oversight of the Australian Securities and Investments Commission (ASIC) and how it operates is warranted amid confirmation that it has used revenue derived from industry funding to underwrite the writing of submissions for consumer groups, according to the Association of Financial Advisers (AFA).
AFA chief executive, Phil Kewin, said he found confirmation of the arrangement with respect to the funding of the consumer commissions “very disturbing” in circumstances where financial planning companies had been subjected in successive increases in the levies raised to fund both ASIC and the Australian Prudential Regulation Authority (APRA).
“What this amounts to is effectively passing on the cost to financial advisers,” he said. “There needs to be more oversight of the ASIC funding model.”
Kewin was commenting on a Money Management report that ASIC had confirmed the use industry funding to support the consumer submissions.
Answering a question on notice from a Parliamentary Committee, ASIC said, while it lacked a dedicated budget, it would from time to time support a funding allocation of between $10,000 and $15,000 for the preparation of consumer submissions to an existing policy consultation process”.
The Parliamentary questioning of the ASIC funding model arose out of confirmation that ASIC’s Consumer Advisory Panel (CAP) had played a role in ensuring funding to two Griffith University academics to write a submission with respect to the Financial Adviser Standards and Ethics Authority code of ethics.
ASIC said in its answer to the Parliamentary committee that it consider that CAP funded submissions “have played an important role in ensuring the consumer voice is heard in consultation processes on issues that materially affect the lives of Australian consumers”.
Kewin said that in all the circumstances he believed there needed to be greater transparency around the origins of such submissions and whether they had been funded by ASIC, including the justification of why such funding was deemed necessary.
