Costs imposed on an AFSL holder to fund an ASIC investigation may become "quite onerous" should the government legislate a user-pays method to cover the regulator's activities, argues one financial services lawyer.
Following the launch of a consultation period to obtain stakeholder views on the introduction of an industry funding model for the corporate regulator's activities, Sophie Grace Compliance and Legal director Sophie Gerber said AFSL holders will struggle if the model is introduced.
"Previously, there were no large annual costs imposed on AFSL holders or ACL holders. The cost of an AFSL or ACL holder being the subject of an ASIC investigation could become quite onerous and may impact on the AFSL or ACL holder's ability to meet their ongoing financial requirements," Ms Gerber said.
The "most concerning aspect" of this proposal is that the defendant who is subject to investigation may be required to cover the salaries of ASIC staff involved in the investigation, she added.
"Presumably these salaries will not be disclosed prior to the commencement of the investigation and this may mean that defendants with judgments or orders made against them could be subject to a very expensive invoice at the end of the investigation," Ms Gerber said.
"This means that a significant level of risk and financial management needs to be implemented prior and during the investigation in order to ensure they are financially capable of paying the costs of the investigation."
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