ASIC should emulate the US SEC model to avoid levy rises

The financial adviser who has taken on the Australian Securities and Investments Commission (ASIC) over the size of its levy increase is now urging the Federal Government to adopt the US Securities Exchange Commission (SEC) model for having wrong-doers foot the bill for their own wrongdoing.

The principal of small planning firm Shenton Limited, Ross Smith, wrote to the Commonwealth Ombudsman complaining the rise in the ASIC levy risked making his business insolvent and suggesting that small licensees were, by ASIC’s own admission, being made to foot the bill for regulatory action largely directed against the major institutions, particularly around fee for no service.

He said that, in these circumstances, rather than having small licensees foot the bill, legislative changes should be made to ensure that the wrongdoers were punished for their own misdeeds.

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“The SEC fines institutional wrong doers - not just for its enforcement costs but fines wrong doers as punishment,” Smith said and cited the examples of Blackstone and KKR being hit with US$10 million ($12.8 million) fines and compensation to investors.

“Small advisory businesses are being pushed to the edge of insolvency by the ASIC levy over abuses caused by big banks and AMP,” he said.

Smith claimed the SEC “tells institutions the fine and then goes to the Court for ratification. US financial institutions agree to the fine without admitting liability”. 

He said that, by comparison, ASIC took two to three years to litigate an issue.

“The SEC did not use an enforcement cost levy model to suck the money out small retail advisory practices who have done no wrong,” Smith said.

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The fines regime should also include wrongdoers who operate w/o a licence as well. Melissa Caddick & co

This Fed Govt is inept. More proof.

The ASIC levy is just one component of the crushing regulatory cost burden on financial advice. Most advice firms are able to wear this burden without the risk of insolvency, but only by increasing client fees, reducing client numbers, and reducing support staff.

The end result is that fewer consumers are able to access professional advice, and more consumers are being harmed by dodgy unregulated advice and products. This is the exact opposite of what consumer protection regulation is supposed to deliver.

exactly, its annoying, but small change compared to the rising compliance burden, PI costs, the risk to do business and the rest.
While everyone is blaming the Fed Gov, labor would have done the same if not more. Prob is, the Fed need to find some inner trump and push hard against the virtue signalling media, including the ABC. Way too much pandering the media crying.

And to top it off after ASIC increase Adviser Levies by 160% in its 3 year existence.
ASIC announce last week, right when Levies were due or pay 20% interest or get deregistered, that ASIC have received $160million in fines in last 6 months of 2020.
And that $160million All goes to consolidated revenue, whilst Advisers pick up the bill for the corporate cops and lawyers to impose these fines.
And continue to do.

The government and ASIC have clearly failed. By agreeing to implement the RC findings without question they have left clients significantly worse off. The entities that caused the most harm in the RC, the banks, have walked away from the mess they created for everyone else. The government and ASIC acknowledge this but are so busy blaming each other that nothing gets fixed. If the government had any courage they would chase the banks, but we know they are in the banks pockets, so small businesses instead feels the pain, while the banks and the executives continue their bonuses, untouched by the RC that they called for.

The banks have already paid billions in remediation costs and fines to the regulator, and so they should. However, where has the money gone? It's gone to consolidated revenue, that's where! If ASIC employ additional resources and as a result impose fines that cover (and we know they MORE than cover) ASIC's operating costs, then that should count as revenue to ASIC and be offset against the ASIC Supervisory Levy. Rather than platitudes and virtue-signaling, perhaps Minister Hume should have a chat with her colleague Mr Frydenberg to change the current system as it is blatently unfair.

ASIC, the banks & the Union funds have no interest in providing "advice" to consumers. It's one gigantic con. All they are interested in doing is to building the number of bonus collecting intra-fund marketing reps, to further increase the monopoly for the Union Super Funds, and allow the bank funds to do the same. The fact that the major financial planning bodies fail to call out intra-fund for the racket that it is, proves this is the case. It's not about getting advice, rather it's always been about stitching up funds under management. Wakey wakey.

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