ASIC funding model 'one-size-fits-all'

13 October 2015
| By Malavika |
image
image
expand image

The Federal Government's proposal for industry funding of the Australian Securities and Investments Commission (ASIC) is a "one-size-fits-all approach" that could decrease efficiency and increase complexity, according to the Governance Institute of Australia.

Responding to the Government's consultation paper, titled ‘Proposed Industry Funding Model for the Australian Securities and Investments Commission', for which submissions closed on 9 October, the Governance Institute said the model takes a "capacity-to-pay" approach rather than imposing costs on those creating the risk.

Arguing the funding model is "just not good enough", chief executive, Steven Burrell, said the proposal to impose costs on those creating the need for regulation through fees based on market capitalisation is based on assumptions.

"It does not take into account that higher market capitalisation companies are generally better resourced and have strong governance, risk and compliance programs. It cannot be assumed that they demand more frequent regulator attention," he said, pointing to smaller cap companies that also demanded regulatory attention.

"ASIC resources devoted to phoenix activities that do not occur in the listed market do not even rate a mention in the consultation paper," he said.

The Governance Institute also rejected the consultation paper's view that larger entities were usually a greater threat to the economy as it had more investors and played a bigger role in the economy, saying the analysis does not prove this.

"Nor are we convinced that price signals will achieve greater efficiencies in the way ASIC allocates resources," Burrell said.

"In fact, price signals have the potential to create an overtly business culture within the regulator and could be a disincentive to government to increase the pool of public funds available to ASIC."

The second paper should include evidence of the merits of this model, demonstrate how this model has been successful in boosting market integrity in other jurisdictions, and explain why they have been removed.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 1 week ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 1 week ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 3 days ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 1 day ago

Having divested its advice business in August, AMP is undergoing restructuring in at least four other departments amid a cost simplification program....

2 weeks 4 days ago