The federal government should implement recommendations from a Senate inquiry to alter the funding model for the Australian Securities and Investments Commission (ASIC) to make it less reliant on industry levies, including those imposed on financial advisers, the SMSF Association has stated.
Referring to last week’s Senate Economics References Committee report into ASIC, which made 11 recommendations, the association urged the adoption of the last suggestion calling for the government to reassess the regulator’s funding so more was drawn from regulatory fines, while levies charged on industry subsectors were reduced.
SMSF Association chief Peter Burgess said: “We have long advocated a review of the industry funding model (IFM) that clearly is not fit for purpose – a point highlighted in the report.
“The underlying principle of the IFM where well-behaved firms foot the bill to regulate poorly behaved firms is fundamentally flawed and unsustainable.
“The report adds that the IFM has been ‘negatively received by participants to this inquiry, characterising the funding model as unfair, poorly administered and counterproductive’. The association can only concur.”
Burgess highlighted the report’s finding that the IFM contributed about 83 per cent, or $422 million, to ASIC’s budget for 2021/22 through levies on 52 industry subsectors, with those fees increasing since they were first introduced.
He noted the initial financial adviser levy in 2017/18 was $934 per adviser compared with the 2022/23 figure of $2818, which was reduced from $3217 after protests from the advice sector, and the 2024 ASIC levy announced today would still be charged alongside a new fee of $1186 to fund the Compensation Scheme of Last Resort.
The association also supported a recommendation that the handling of alleged corporate misconduct be carried out in a more timely manner, adding ASIC’s slow actions were a significant factor in the outcome of issues related to Dixon Advisory.
“As the report says: ‘ASIC’s enforcement actions in response to the now-defunct Dixon Advisory are illustrative of its enforcement woes. It took ASIC two years to settle its case against Dixon and the company was penalised $7.2 million – a fine unlikely to ever be paid,’” Burgess said.
“It highlights why it’s critically important for the corporate regulator to move swiftly to investigate reports of misconduct so that consumers are protected.
“What we have learnt from the Dixon Advisory fiasco is that because of the regulator’s tardy response to consumer complaints, the advice industry could now be left to foot much of the bill for all the unpaid Dixon compensation claims that could total many millions of dollars.”
