User pays ASIC model to hurt consumers
Bank customers could be slugged with higher fees if the Government implements an industry funding model for the Australian Securities and Investments Commission (ASIC).
Responding to Assistant Treasurer, Josh Frydenberg's announcement that the Government was seeking stakeholder views on the ‘user pays' funding model, Australian Banking Association (ABA) industry policy executive director, Tony Pearson, warned there could be unintended consequences.
"Increasing the cost burden on the Australian financial services industry could mean that consumers will bear some of the costs and it may make the sector less competitive internationally," Pearson said.
"If the Australian Securities and Investments Commission needs more funding certainty, this could be achieved by the Federal Government adopting a multi-year funding model from its existing budget.
"If ASIC was able to recover the cost of its activities directly from participants through fees and levies, it could lead to less constraint on increases in the cost of regulation because it would be less visible to government. Regulators need to be accountable for effective, efficient and necessary regulation."
However, ASIC chairman, Greg Medcraft, said the industry funding model proposed by the Financial System Inquiry would boost transparency.
"An industry funding model is about ensuring that those industries that need the most regulation should pay for it, rather than taxpayers," Medcraft said.
"It is about establishing a price signal for regulation which we think will drive economic efficiencies in the way resources are allocated in ASIC.
"And an industry funding model will also improve ASIC's transparency and accountability. That means business will better understand the job we do by having greater visibility of the cost of doing that job."
AUTHOR
Nicholas O'Donoghue
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
