Lack of Detail in ASIC Funding Bill Raises Concerns

The Federal Government has introduced legislation to provide industry based funding for ASIC claiming it would improve compliance but industry bodies have raised concerns about the lack of detail in the bill.

The legislation, ASIC Supervisory Cost Recovery Levy Bill 2017, was introduced into the House of Representatives on 30 March and if passed would create an estimated levy of $960 per adviser per year, payable at the licensee level, according to Treasury documents released late last year (See: Proposed ASIC Funding Model Would Cost $1,000 Per Adviser).

During a second reading of the Bill Assistant Minister to the Treasurer, Michael Sukkar said an industry funding model for ASIC would “…make industry more accountable for its behaviour and make ASIC a stronger regulator”.

Sukkar also said it would be a fairer model as only those who created the need for regulation would bear the cost instead of tax payers and good conduct would drive down the cost of supervisory levies.

Both the Association of Financial Advisers (AFA)  and Financial Planning Association (FPA) have raised concerns with the bill stating it lacks details around the quantum of costs to be paid by advisers as well the level of payments that may be required in the future

The AFA stated it was concerned the Bill made no distinction between advisers and will pass on the costs of compliance to those who are behaving professionally and ethically.

AFA Chief Executive, Philip Kewin said there was also no provision to discount the levy paid by advisers who have been compliant.

“It is difficult to support the Bills as they merely create the legal framework…with no information about the cost recovery methodology…”

“This seems unfair, particularly when all advisers have already had to bear a raft of costs, including increased Professional Indemnity insurance premiums and costs associated with upgrading Fee Disclosure Statements and incorporating opt-in arrangements,” Kewin said.

Kewin also called for a cap on how much advisers could end up paying as a levy in the future given that the legislation as it stands contains no provision along those lines.

“The AFA recognises and is an active participant in measures to ensure the highest professional standards are maintained to protect the consumer but measures should be practical, affordable and reward excellence,” Kewin said.

The Financial Planning Association, in its submission, was critical of the lack of detail in the Bill, labelling it ‘shell legislation’ in which the contents would be provided at a later time by delegated powers.

“This creates enormous uncertainty for industry when there is the potential for significant cost to be levied from businesses based on presently unknown metrics,” the FPA stated.

“It is difficult to support the Bills as they merely create the legal framework and ability for ASIC to recover costs, with no information about the cost recovery methodology or sub-sectors so entities can determine which levies will apply to their business, who will be required to pay for what elements of ASIC’s activity, or what the reporting requirements will be for which entities and sub-sectors,” the FPA added.

The Minister for Revenue and Financial Services, Kelly O’Dwyer said the Government would release draft regulations with greater detail on the operation of the model for consultation in the coming weeks.