The Australian Securities and Investments Commission (ASIC) has pointed to legislation as the reason for how the ASIC levy is funded but that it has “thought about” small financial adviser businesses everyday and agreed there was an issue in how the levy was funded.
Speaking at a Parliamentary committee, ASIC chair, Joe Longo said the regulator was “very conscious” of the increase in the levy for individual advisers.
When asked whether ASIC had thought about the impact on small businesses of the levy that had increased 236% over the last three years, Longo said ASIC took the issue very seriously.
“I don't want to suggest for a second that we're not very alive to the concerns being raised by financial advisers, and indeed, they're not alone. The auditors have also had concerns over the last couple of years in other industry sectors about the equity, or fairness of the system of cost recovery that we're operating under at the moment,” he said.
“There are some very fundamental sort of philosophical or policy questions that that underpin what we have at the moment. The scheme we're operating under at the moment, is actually largely mandated by law and regulation.
“There's no definition, for example, for a small business enterprise – the sectoral definitions we're using are all prescribed by regulation. Now, that doesn't mean there aren't a lot of questions about how the system works, and how they [advisers] got the levy invoices that they got.
“We're very conscious of the need to be as transparent as we can be so that people see why they're getting the levy notices they're getting and how they were calculated.”
ASIC chief operating officer, Warren Day, said this was a matter to be raised with Treasury and how they set up the funding scheme. He noted that ASIC could also provide hardship relief with members of the sector who were having trouble.
“Our responsibility is to ensure that we issue those levies as required by the law so please don't take it from that we have little interest or care about the plight of small business about that, I think that's far from it,” Day said.
When asked about what proactive actions ASIC had done to discuss with the Government and Treasury on the levy issue, Longo said there would be a review on the cost of recovery regime sometime next year and would likely be led by Treasury.
“In recent months [and] over the last years, ASIC has met with and written to representatives from the finance industry, from the accounting body representatives on the issues they've raised, and which are the exact same way they've been raising with you,” Day said.
“We have an ongoing dialogue with Treasury and the Government about the nature of the industry funding model. All of these things are raised at all meetings when we talk about the industry funding model and the feedback we're getting from our stakeholders, and those industry representatives.
“So to say that there's not a dialogue about that is not true and there is a constant conversation that has been going on since the imposition of the model. We do provide that feedback and we do provide our view about how the models working and how it's being perceived by industry.”
ASIC commissioner, Danielle Press, said she “deeply cared” about the levy issue and that she thought about it almost every day.
“We've been raising it with government a lot in our conversations, both directly and indirectly. I agree with you [that] it is an issue but we need to resolve the issue in a way that is actually compliant with the law,” she said.
Committee member, Senator Deborah O’Neill, pointed to the fact the industry funding model was set up three years ago by the current government and that ASIC, according to their evidence, had been in constant communication with the Government and Treasury on the issue.
“You have to assume that the Government knows that this is problem – it's been known for three years and it's an implemented the legislation,” she said.