Why penalties can’t fund the ASIC levy

If the Australian Securities and Investments Commission (ASIC) levy was partly funded by penalties paid by individuals or businesses it would look like an incentive to aim at players with big pockets.

ASIC was questioned during a parliamentary committee as to why penalties went into consolidated revenue rather than offsetting some of the levy costs paid by financial advisers.

ASIC chief operating officer, Warren Day, said there were significant dangers in perverse incentives.

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“The accusation might be made that we would continue to aim at those players who have deep pockets and are able to pay for the sake of, if you like, improving our budget,” he said.

“That's not what we are here to do. What we are here to do is to ensure that the law is applied properly and, where need be, prosecuted properly.

“Otherwise, what you have is us targeting people, or the accusation that we would be targeting people, purely because we might be able to get a decent penalty out of the matter.”

ASIC deputy chair, Sarah Court, said she would have significant concerns when it came to significant penalties which were potentially hundreds of millions of dollars coming back to ASIC.

“It would come to ASIC to fund its enforcement or other supervisory work, I think. There should be no incentives for a regulator to, in effect, maximise a penalty for it to use. I would very much be very interested in exploring these issues that the committee has raised with us,” she said.

“But I'm not sure that I'm speaking personally here, as the legislatively informed person on this call, that the answer lies in that penalty route suggested. But I would very much like to think about these issues further.

“Is it right that enforcement costs are recoverable against an overall industry when the enforcement action is taken against people that have contravened the law?”

When asked the difference was in ASIC recovering court costs and recovering funds from a penalty, Court said the court costs were costs that had been incurred in the investigation or prosecution of a matter.

“If ASIC recovers $10 million, what do we do with that? We are, in effect, receiving potential funds, so it's almost like generating a new revenue stream for ASIC,” she said.




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Wow. So the regulator is worried about exposing itself to conflicted remuneration. Surely the regulator, if anyone, should be immune from pursuing fines just for its own revenue purposes? If they can't control this behaviour in their own organisation it is no wonder they have no confidence that anyone else can control their urge to 'do the wrong thing'.
Quote: “Otherwise, what you have is us targeting people, or the accusation that we would be targeting people, purely because we might be able to get a decent penalty out of the matter.” Are their employees on commission?
ASIC is funded by the Government and the fines go to consolidated revenue, so what is the difference?

ASIC is funded by Adviser levies, not Govt
Yet all fines go straight to consolidated revenue.
The way Frydenberg has set up ASIC Adviser funding, ASIC are now a positive money generating entity for Govt budget.
Guaranteed they get bonuses (effectively commissions) on fines generated.
Frydenberg STINKS !!!!!
Corrupt ASIC

You could also argue their decision not to revoke the AFSLs of large institutions is based on their incentives to keep the levies flowing in, or provide their officers with jobs after their ASIC tenure is finished….. too cynical?

I'm glad the ASIC brought up the issue of Incentives - so can we have a look at that 2018 Gift Register?

what about the conflict of erroneously allocating costs to a cohort of advisers who are not responsible for the ACTUAL costs in the first place? Mind boggles.

BS,BS & more BS from a Corrupt out of control regulator.
“there were significant dangers in perverse incentives”, says ASIC.
But that danger doesn’t apply to small business Advisers being forced to be ASICs legal funders for court cases against big banks, with zero chance of a reward for our Adviser legal funding.
Of course that is not a perverse incentive is it ASIC ????
- ASIC YOU ARE SO CORRUPT
- AISC YOU CONTRADICT YOUR OWN BS AT ALMOST EVERY TURN WHEN QUESTIONED
- ASIC YOU ARE DISGUSTING AND NEED TO BE CLEANED OUT FROM TOP DOWN.
What an absolute farce.

So the answer is to charge those who don't have deep pockets, and in the majority have not done anything wrong? ASIC is so incompetent and corrupt.

Another version of socialise debt and privatise profit by a corrupt criminal cartel. No respect for this mob of gangsters determined to destroy small businesses.

"ASIC chief operating officer, Warren Day, said there were significant dangers in perverse incentives" is the perpetuation of untruths in Domestic Governance that critically weakens democracy and undermines the Community in English Common Law across the British Commonwealth for principles procedural justice and distributive fairness. Politicians refuse to allow Financial Planners to appear before the Joint Parliamentary Committee at the same time when A-sic is telling untruths in Affective Trust by testimony pre-drafted by A-sic corporate lawyers so it is not counter-balanced by truth in Predictive Trust (reference "Knowledge on Trust" by Paul Faulkner, Oxford Scholarship Online: May 2011) by Financial Planners' testimony, hence continual prejudicial bias against financial planners who function as agents of their clients under the Corporations Act, only serves to enhancing cost conflicts with against clients to cause financial advisory services to be more unaffordable, due to administering IN THE NAME OF LAW in the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017 for TREASURY REVENUE collections, sucked out of small independent financial advisory firms registered in Financial Advisers Register, in contrast to employees and bank executives of financial institutions who are not registered in Financial Advisers Register and who caused the majority of the findings of the Hayne Royal Commission that caused ASIC Supervisory Cost Recovery Levy (Collection) Act 2017 for TREASURY REVENUE collections. Australian Financial Planners and their clients need a Royal Commission of headed 3 Common Law Lords Judges who are not Australian, preferably from what was the House of Lords for a fair judgement to countermand the abuse IN THE NAME OF LAW of Australian Financial Planners and their clients.

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