The SMSF Association has welcomed the introduction of an industry funding model for the Australian Securities and Investments Commission (ASIC), labelling the move a positive for the SMSF sector.
On 15 June, the ASIC Supervisory Cost Recovery Levy Bill 2017 and related bills received passage through the Senate.
Effective from 1 July, the corporate watchdog’s regulatory costs will be recovered from all industry sectors regulated by ASIC through annual levies.
Finance Minister Mathias Cormann said the industry funding model was a critical component of the federal government’s plan to improve consumer outcomes in the financial services sector.
SMSF Association chief executive John Maroney said the industry body believed it was important to have a well-funded regulator to help boost consumer confidence and make sure the financial services industry was sustainable.
“So having a properly funded ASIC and other regulators are an important part of that and we accept it’s appropriate the funding comes from those that are being regulated, as a general principle,” Maroney told selfmanagedsuper.
“I wouldn’t expect any major changes to what ASIC does; at the moment it’s funded by the budget, but it will certainly make ASIC more accountable once it begins being funded by those who are regulated.
“I haven’t seen any estimates of what resources [are being allocated], but if activities such as SMSF shadow shopping are encouraging advisers to improve their game and aim for excellence, then I think ASIC will continuing doing that, it’s just that the funding will come from a difference source instead of taxpayers.”
While the funding model has been broadly supported by the SMSF Association, he warned it was imperative to ensure the levies charged were not burdensome to advisers or detrimental to the provision of advice.
“Funding ASIC is obviously going to have a cost to advisers, so I think there’s a need to balance how that’s going to work,” he noted.
“We need to increase the integrity of professionalism and this is part of a wide-ranging program from the government to do so. At the same time, it’s a matter of trying to make sure that we aren’t adding costs to financial advice where people are discouraged from getting it – that’s what’s needed for balance over time.
“And like all agencies, I’m sure ASIC will be looking for efficiencies so that it can operate in a way that it doesn’t charge additional costs than necessary because in the end, consumers pick up most, if not all, of the costs, so we need to be careful this doesn’t become a costly exercise.”
ASIC chairman Greg Medcraft said Australia had an admired system of corporate regulation supported by rule of law.
“These new funding arrangements will help ensure that remains the case,” Medcraft said.
The model, initiated by the government in April last year, was designed to provide greater stability and certainty in ASIC’s funding to ensure sufficient resources to carry out its regulatory mandate.
The industry funding model also delivers on a recommendation from the 2014 Murray Financial System Inquiry, as well as the 2013 Senate inquiry into ASIC’s performance.
At the SMSF Association 2017 National Conference in Melbourne in February, ASIC deputy chairman Peter Kell announced the regulator was about to undertake a shadow-shopping exercise as part of its assessment of the advice being offered in the SMSF sector.