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.”
One wonders why the police don’t run a similar model, where those they are investigating pay the wages of the police officers… Oh that is right, because it is an insane and unworkable proposition!
The ASIC business case as a whole was that they had a profit making centre (the registries) that covered the costs of the regulatory function. It is a model that works quite well until they want to hive of the profit centre for sale. Their answer to the fiscal hole that is left is to slug business for the cost of a consumer protection service. As this sort of service is in the public interest, isn’t it also appropriate for the public to pay for it (that is, as a government expenditure)? Also if they outsource the funding, they are not bound by the usual demands of fiscal responsibility in terms of justifying their actions/budget/results given the price paid. Its someone else’s price!
This is truly frightening. I have seen first hand the issues and costs incurred in defending an ASIC Investigation. ASIC is like the multi headed Medusa and if the AFSL is to be slugged with staffing costs for investigations where they dont even have to establish a reasonable cause we may as well all give up. The institutions will just add this to the cost of doing business but for the IFA’s it will be just another reason to give up.