ASIC accused of double standards

The Australian Securities and Investments Commission (ASIC) should not be empowered to set its own fees and should remain subject to Government directive.

That is the solid bottom line of multiple submissions filed with the Treasury review of the Industry Funding Model (IFM) for ASIC, with many also suggesting that the regulator has been guilty of double standards – falling well short in its levy forecasting and, in doing so, has not adhered to the same standards it expects of those it regulates.

As well, while ASIC has complained of having resourcing issues, the Financia Planning Association has pointed to the large numbers of ASIC personnel who turn up to meetings.

What should be heartening for financial advisers is that all of the major financial planning representative organisations as well as the accountancy groups have pointed out the degree to which advisers have been particularly hard hit by the current levy formula.

This was exemplified by the Chartered Accountants ANZ submission which pointed out that while levies for registered company auditors fell by 17% in 2019-20 they rose by 44% for the financial advice sector.

“While ASIC may have allocated a significantly higher number of FTE’s to the financial advice sector, during this period the number of financial advisers dropped significantly. For the regulated population, it would be reasonable to expect costs to regulate a reduced population would decline, not increase,” it said.

The CA-ANZ submission along with that of the Financial Planning Association (FPA) called for improved predictability and transparency with respect to the ASIC levy in circumstances where the regulator seemed to be challenged in making accurate forecasts.

The accounting group said that its members had continually pointed out that ASIC was not adhering to the same standards it imposed on those it regulates.

“Our members continually point out that, if they do not comply with one of the many deadlines ASIC places on them, it will result in fines and penalties. Yet the release of a document meant to equip our members to make informed commercial decisions is released solely at ASIC’s discretion,” it said.

“In recent years, this has been at or immediately after the close of the financial period to which it relates, yet still contained only estimates. As a result, ASIC’s regulated population have to budget for ASIC levies with no reliable basis and build that figure into their commercial decisions throughout a financial year.”

The FPA noted that while it noted that ASIC’s resources seemed to be constrained through a combination of budget and efficiency dividends, “we would highlight that at times during consultation meetings, sector specific and direct meetings with ASIC, large numbers of ASIC staff are often in attendance”.

“We can only assume this is charged back to sectors involved in the meetings on a pro-rata basis, however we question the need for large numbers of staff to be present in many meetings and the cost this adds to sectors,” it said.