ASIC levy freeze created $46 million shortfall
The Federal Treasury is making no apologies for the lifting of the two-year freeze on the Australian Securities and Investments Commission (ASIC) levy.
And the reason is simple. The levy freeze resulted in a multi-million dollar funding shortfall which Treasury had to find elsewhere.
Appearing before the Senate Economics References Committee inquiry into ASIC investigation and enforcement, Treasury officials made clear their view that advisers should be paying for the cost of regulating their sector.
They pointed to the recent review of the ASIC funding model and said implementation of those recommendations were in process with a number of recommendations requiring legislation and consultation.
Asked by the chair of the Committee, NSW Liberal Senator, Andrew Bragg, whether they believed it was reasonable for financial advisers to be hit with an increase in their ASIC levy bills from $1,200 to nearly $3,500 in one year, the Treasury official, Tim Baird, emphasised this was because of the levy freeze.
“As you are aware the previous Government had in place a temporary levy relief covering the financial years 2020-21 and 2021-22 and that relief was always intended to be temporary,” he said.
“The costs that were imposed in that period were significantly less than what they would have otherwise been in that period.”
“The principal of the Industry Funding Model (IFM) is that the sectors that cause the need for regulation should cover the cost of that regulation and that’s principle that been applied here .”
“During that period of levy relief there was a $46 million shortfall in funding below what the costs of enforcing and regulating that sector.”
ASIC promised the Adviser Levy, including Advisers as ASICs Legal Funders, i.e. RC Banks Advice cases, etc would be used to offset future Levies.
Last 4 years ASIC has raised $372 in Fines.
ASIC exactly how much of these fines & court costs recovered has reduced Advisers Levy ????????????
This argument that “the sectors that cause the need for regulation should cover the cost of that regulation” is particularly weak. How did small business financial advisers cause the enforcement action that ASIC took against the Big Banks (most relevantly after they had left advice) or more recently the inhouse product related issues with Dixon Advisory. How did these small business financial advice firms cause unlicensed operator costs like ASIC’s investigation of Melissa Caddick. This “who caused should pay” argument sounds like a good justification in theory, however it is deeply flawed in reality. It is seemingly used as a basis to send a whole lot of costs in the direction of financial advisers. Maybe an independent audit is needed.
In terms of the fines and penalties that have been generated by ASIC enforcement action, they go straight to the Government (Consolidated Revenue). The small business financial advice firms only get a very partial benefit (roughly 10%) in terms of the litigation costs that are recovered from the firms who the action is taken against. Now in terms of financial advisers investing in a fund that litigates against large institutions, this is nothing more than a fraud or a Ponzi scheme. The money all goes to the owner of the operator of the scheme (the Government). Maybe ASIC should investigate this scheme, and step in to protect the interests of the investors!
I blame the thieving governments for introducing the Levy. No private business should fund a government department regulator. Advisers should not bother telling regulators anything bad they see happening because it will only cost them – ASIC to investigate what you tell them and depending on the size of the business they shut down less advisers to pay their fee. Can you not see the conflict of interest you idiots that now run our country.
If Treasury and ASIC refuse to budge or are unwilling to negotiate, then the simple solution is to vote them (mandate) out next election.
The comments from Treasury prove the vendetta the government and public service have against the financial planning profession. The facts are simple. If financial planners are being used as ligation funders then we get an offset of the proceeds of the fines / settlements. Understanding this there was no shortfall and no need to increase levies. Based on the monies raised from ASIC actions in fact they need to refund the adviser levies back to financial planners.
So I’m paying ASIC a fee to regulate “MoneyMaddy” on Tik Tok and Insta. I’m paying a fee to regulate a person posing as an Adviser and selling a method to trade in BitCoin…..I’m paying a fee for ASIC to turn a blind eye when AwareSuper sells corporate bonds to raise money to buy StateSuper and writes it all off….all these examples makes sense. And I will be paying a fee for them to regulate Hesta flogging more super in a couple of years time. But the only person going to jail is the Adviser for a spelling mistake in their fee disclosure statement.
Funny how when you report a scam to ASIC they say put it on the list.
This Josh Frydenberg imposed levy is a burdensome tax on small business. I can’t believe his then Chief of Staff who introduced this is now an executive at Colonial.
Love the picture!
This is typical Treasury double speak. Ask them where the proceeds of the disciplinary actions went. The go to general revenue. So the advisory community foots the bill, but there are no offsets for success. So don’t come back and say they made a loss Boo Hoo. No they didn’t, they just pass on the expenses and take the gains.
Judging by the quality of work done by ASIC, I could suggest a much more immediate and effective way for them to say money.
Half of ASIC could be sacked and no-one would know the difference.
Slowly but surely strangling the small business sector of financial advice into its ultimate demise. Thanks Government.
As if the Levy increase wasn’t enough, we are also dealing with the new EOFY accounting reporting standards that seem to have increased these bills by around forty percent, and we still have PI insurance pricing to come…
From the ASIC FY 2021/22 report.
They only raised $1.675 billion dollars from fees and charges and they have the gall to whinge about some BS $46m shortfall?
The biggest financial scammer in Australia is ASIC…who regulates the regulator???
Are corporations charged a levy for the AFP, or ADF or for border security? No these (and others) are funded by taxes raised by the fed Govt. Yet Govt allows ASIC to essentially tax corporations for being a corporation under the faux guise of self funding. It’s a total rip off.
In FY 21/22 ASIC spent $269 million on employee benefits. All they seem to do over time is build up their fiefdom.
Too much money chasing too few competence