The Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and the Australian Taxation Office (ATO) should be the subject of a comprehensive audit to ensure they are doing their jobs properly and efficiently.
That is the assessment of the Association of Superannuation Funds of Australia (ASFA) which has called for the audit task to be referred to the Australian National Audit Office (ANAO) arguing that there is a form of moral hazard in the current arrangements with the regulators having a vested interest in increasing industry levies to increase their discretionary coffers.
What is more the superannuation funds do not want to pay levies which effectively cross-subsidise ASIC’s handling of financial advisers and Self-Managed Superannuation Funds which are not directly subjected to levies.
In a submission to Treasury dealing with the Financial Institutions Supervisory Levies being used to fund the regulators, the ASFA has pointed out that superannuation funds will pay over $89.1 million this year in supervisory levies, up from $6.8 million and it wants to know whether the industry is getting value for money.
“Given that this is money which could otherwise have been attributed to member accounts, it is critical that all of the agencies who receive the levy are accountable for the costs and expenditure they incur,” it said.
On the question of moral hazard, the submission said levies represented “a form of moral hazard, in that the agencies have a vested interest in increasing the levies with relatively little accountability while the parties providing the funding (industry) have no control over the resourcing decisions made by the agencies”.
“This extends to the type, and in particular the scope, of activities engaged in by the agency and the quantum, and nature, of the resources used,” it said.
Elsewhere in its submission, the ASFA argued that because, functionally, superannuation was a part of wealth management it was “critical to ensure that superannuation funds only pay levies with respect to consumer protection within superannuation and not with respect to other wealth management sectors, such as managed investments and financial advisers”.
It said this was because neither Self-Managed Superannuation Funds (SMSFs) nor financial advisers paid levies.