ASIC asks for more funding to bolster regulatory efforts

Speaking before a parliamentary inquiry into the oversight of ASIC, the regulator’s deputy chairman Sarah Court emphasised that additional funding is crucial to enhance technology capabilities for efficient interrogation and analysis of vast volumes of digital material.

Court underscored ASIC’s urgent need for a technology upgrade to “modernise” its enforcement capabilities, describing the situation as “dire” and emphasising the necessity of additional funding to accomplish this substantial task.

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She highlighted that ASIC seized and reviewed 2.6 million documents last year alone.

“In relation to funding for enforcement, in my view, the most significant benefit of additional funding would be to enhance our technology capability to improve how efficiently we can interrogate and analyse the vast volumes of material that we receive in any particular matter,” Court said.

“Where we are significantly hampered at the moment is that we don’t have the funds available to invest in the technology upgrades that are needed to keep pace with the explosion in digital information that regulators now have to interrogate.”

Court highlighted the strength of ASIC’s enforcement division, noting that the regulator boasts “hundreds of investigators, very experienced and dedicated people,” a size she considers substantial. However, she reiterated that the regulator’s technology is lacking.

“There is no doubt in my mind that were we able to have this technology investment, we could run the matter that we do have more efficiently and that would enable us clearly to take on more matters. If we can take on more matters, we will be able to recover more civil penalties to return to government revenue,” Court said.

“The more we invest in our enforcement capability, the more matter we can take to court, and the more penalties will be imposed.”

The chair added that while additional funding wouldn’t necessarily make ASIC “revenue neutral,” it would enable the agency to increase the number of enforcement matters it pursues.

Court also discussed the retention of penalties and expressed her personal view that ASIC should retain a greater portion of funds obtained through penalties, suggesting the creation of an incentive for enforcement agencies to retain court-imposed penalties for misconduct.

Liberal Senator Paul Scarr wholeheartedly supported Court’s funding calls, emphasising how it could enable the agency to effectively fulfil its responsibilities.

“This is necessary if ASIC is going to perform its function at a level that the community expects,” he said, adding that he and the committee would engage in further conversations with ASIC regarding its need for additional funding.

ASIC’s budget boost

Among the increases to ASIC’s funding in the budget was $206.4 million over four years from 2024–25 (and $7.2 million per year ongoing) to improve the data capability and cyber security of APRA and ASIC, and to continue the stabilisation of business registers and modernisation of legacy systems.

“The cost of this measure will be partially met from cost recovery through ASIC and APRA industry levies,” the budget documents noted.

Speaking with ifa following the budget in May, Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards Phil Anderson noted the funding for registers as important for advisers.

“There was supposed to be a transfer of the registers from ASIC to the ATO that the government then decided not to do and obviously, this particular one signals that the government is looking at enhancing or rebuilding the registers within ASIC,” Anderson said.

“I think anytime they are going to provide additional money to ASIC, unless they say otherwise, we can assume that there’s a risk that it will be caught in the industry funding levy.

“Where it refers to registers, we have the AR register, we have the financial adviser register, we probably pick up a proportion of the cost of the AFSL registers. So, they are going to charge us.”