The Federal Government will give the Australian Securities and Investments Commission more than $127 million dollars to boost its enforcement work and will introduce a ‘user pays’ model to regulation from the second half of 2017.
Of the $127.2 million to be given to ASIC, $57 million will be used for increased surveillance and enforcement in the areas of financial advice, responsible lending, life insurance and breach reporting.
A further $61.1 million will be used to improve the regulator’s data analytics and surveillance capabilities and modernise its’ data management systems, with an additional $9.2 million to be allocated to ASIC and Treasury to better implement appropriate law and regulatory reform.
Under this latter figure ASIC will be funded to take on product intervention powers to rapidly respond to market problems and to introduce product distribution obligations for industry to build a stronger customer-focussed culture. ASIC will also review its enforcement regime, including penalties, to ensure they are an effective deterrent.
“ASIC has long believed that those who generate the need for regulation should pay for it”
The Government also announced that future funding will be drawn from the industry sectors regulated by ASIC, following a recommendation made by the Financial System Inquiry (FSI), with the industry funding model to commence from mid-2017 onwards.
The immediate boost in funding and the shift to ‘user pays’ are part of the Federal Government’s response to the ASIC Capability Review which was commissioned in July 2015.
A further part of that response has been to extend the term of Greg Medcraft as ASIC Chair by 18 months and to remove ASIC from the Public Service Act to allow it to recruit specialist staff. The Government will also appoint an additional ASIC Commissioner with experience in the prosecution of crimes in the financial services industry.
Medcraft said the regulator welcomed both the additional funding as boost to its surveillance and enforcement work, as well as the adoption industry funding model stating, “ASIC has long believed that those who generate the need for regulation should pay for it”.
The Government’s actions are a response to Capability Review of ASIC which began in 2015, and to the FSI, and has also led it to question whether the Financial Ombudsman Service (FOS) a wider jurisdiction around small business complaints and disputes.
As a result of this concern ASIC will examine extending the current jurisdiction of FOS and conducting a review of monetary limits and compensation caps offered under FOS.
