In November 2016, the government released a proposals paper for a new ASIC funding model, which shows the advice sector will be levied $24 million to refund the regulator, or $960 per financial adviser. An exposure draft for the bill was released last month, setting out the penalties AFSLs could face under the model.
In a new submission issued to Treasury, the FPA said since the industry funding model for ASIC will create a large burden on small businesses, any proposed changes should be required to go through appropriate due process.
However, this is not possible as the bills lack a significant amount of detail, the FPA said.
“The FPA has grave concerns at the lack of transparency being created with the consultation process Treasury is undertaking at this time when consumers will bear the ultimate cost of this funding framework,” the submission states.
“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 noted that many levied businesses will be forced to pass on the costs imposed by the ASIC funding model to consumers.
“Including more detail in the legislation to put the structure of the funding model in place will provide certainty and stability for [the] industry and enable them to appropriately plan ahead to manage the accumulative impact of such costs for their clients and the sustainability of their business,” the submission states.
“This is a matter of due process and procedural fairness in imposing a very significant levy regime on industry and ultimately Australian consumers.”
The FPA also recommended that legislation include risk-based criteria for regulated entities within each sector and sub-sector. The bills should also outline the methodology for determining the annual levy, the FPA said.
Further, the submission states that the draft bills do not deliver the FSI recommendation to “improve ASIC’s transparency and accountability to industry”.
“We are concerned that the ASIC accountability measures have not been released or even referred to in this consultation process or the explanatory material,” the FPA said.
The FPA recommends that “ASIC accountability measures be subjected to appropriate consultation processes, be finalised and released prior to the commencement of the ASIC funding model on 1 July 2017”.
Surely the union movement should be funding ASIC, as they are the primary beneficiaries of ASIC’s persecution of financial advisers while turning a blind eye to union fund behaviour.
So advisers will be paying for shadow shopping exercises as well. Seems they wont give up until we work for free but carry all the risk. This is plain ridiculous. Do they even begin to fathom the cost of licensing, compliance, PI, Research, Education and Technical conference fee’s already burdening the small advice practices. Again this will easily be handled by the big 4 banks who are the main culprits imho.
Couldn’t agree more