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.

“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.

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“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.