Responding to a question on notice that Senator Slade Brockman asked during Senate estimates in February, ASIC explained how it makes its investigation and enforcement decisions, noting that it aims to “detect, disrupt and respond to unlawful conduct”.
“In doing so, we prevent and deter actual and future misconduct, improve standards and behaviours within our regulated population, and reduce the risk of harm to Australian consumers and investors,” it said.
“The factors we consider when deciding whether to investigate and take enforcement action vary according to the nature and circumstances of the suspected misconduct reported to or detected by us, giving particular attention to matters that align with our strategic and enforcement priorities.”
Looking specifically at ASIC’s level of enforcement spending on the financial advice sector, Brockman asked: “Why does ASIC spend more money on the financial advice sector than any other sector including ones that are much larger, particularly when this sector has been subject to a process of professionalisation over a number of years and is now barely more than half the size it was four years ago?”
According to the corporate regulator, this can be traced back to the financial services royal commission.
“ASIC continues to see a significant number of reports of misconduct in relation to the financial adviser subsector and financial advice matters continue to represent a significant proportion of ASIC’s enforcement activities,” it said.
“ASIC considers that this is in part due to:
- Heightened community and industry awareness of misconduct, in particular financial advice misconduct, following the Financial Services Royal Commission (FSRC);
- ASIC’s supervisory and enforcement approach following the FSRC; and
- A not insignificant enforcement effort required in respect of unlicensed operators involved in providing financial advice.”
Investigating these “unlicensed operators”, ASIC said in response to another question on notice from Brockman, cost a total of $4,488,157 in the 2022–23 financial year – which was charged to the financial advice sector.
Around $650,000 of this figure was related to the Melissa Caddick matter, with ASIC explaining that it would likely spend another $15,000 on the Caddick case in FY23–24.
However, that was far from the only case of advisers paying for ASIC investigations into unlicensed operators. The regulator said that it worked on 39 unlicensed conduct operators in FY22–23 in the financial advice sector, with 10 of these matters costing ASIC in excess of $100,000.
CRIS revisions
Brockman also raised questions about ASIC’s Cost Recovery Implementation Statement (CRIS), the first of which was released in June 2023 and estimated the cost of the ASIC funding levy for the financial advice sector would be $55.5 million – or a minimum levy of $1,500 plus $3,217 per adviser.
When the final figure that was issued in November last year, it was instead $47.6 million, taking around $400 off the figure per adviser.
Brockman sought an explanation from the regulator for the almost $8 million reduction between June and November.
According to the regulator, the June CRIS represented the expected cost of enforcement activity, however the estimates for each sub-sector are based on “six months of actual costs (July to December of the financial year) and forecast costs for the remainder of the financial year”.
“During the financial year, after the calculation of those estimated costs, ASIC’s discretionary enforcement activity was higher in other sub-sectors including retail over-the-counter derivatives issuers,” ASIC said.
“As ASIC makes discretionary choices to undertake enforcement based on a triage approach of threats and harms, less enforcement activity was undertaken relating to the ‘licensees that provide personal advice on relevant financial products to retail clients’ sub-sector than expected.
“The industry funding levy that applied to the ‘Licensees that provide personal advice on relevant financial products to retail clients’ sub-sector for the 2022-23 financial year represents ASIC’s regulatory effort for that sub-sector for that year.”
If i walk into a house claiming to be a plumber and cause $500,000 worth of damage to the house, should licensed plumbers pay for this?
ASIC are an absolute joke!
ASIC let Australians be scammed to the amounts of :
2021 = $2 BILLION Scammed
2022 = $3.1 BILLION Scammed
2023 = $2.7 BILLION Scammed
Yep ASIC let Australians be scammed by at least $7.8 BILLION in 3 years. ($7,800,000,000).
Yet they continue to attack and focus on Real Financial Advisers that have NOT Caused any where near these losses.
What other Industry on the planet – Professional or otherwise, subsidise / pay outright for the costs to enforce / investigate the Unlicensed operators? Medicos? Nope. Lawyers? Nope. Accountants? Nope. It is a total farce, and is going to take every single adviser and their clients to get rid of this garbage that the Govt., ASIC and Treasury have put in place.
So when they recover assets or costs via penalties/fines, they’re going to reimburse Advisers right? Or use the proceeds to offset future amounts payable???
Basic common law principles will confirm that ASIC’s specific target of Financial Advisers is unlawful at best.
So AFCA states 1% to 2% of complaints are against registered Advisers, which means 98% of complaints are against the other sectors. Who do I believe? Corrupt ASIC on the payroll of large Super funds or AFCA ?
This is exactly why the Financial Advice Industry needs to self-govern like all other Professions. ASIC is out of control.
Did ASIC properly/thoroughly investigate the financial planner they alleged was churning insurance products? They alleged a lot of things, turns out its all false. How can you operate knowing your credibility within the community is gone. Why can’t they take accountability? The truth will always be the truth.
Doubtful more than product providers but the budget spent on regulation pales in comparison because ASIC are thieving bullies. Add lying to the list now.
It is obvious that ASIC’s focus on the financial advice sector is clearly a political driven agenda, displaying all that is wrong with Canberra.
Unlicensed operators are simply con artists and fraudsters, which have nothing to do with the properly licensed financial advice sector. How on earth are licensed financial planners responsible for this? What a travesty. What next? Will we be on the hook for every Cyber fraud and corporate privacy breach?
The perfect and pertinent example of the massive power imbalance that exists in Canberra between the Govt., Treasury, ASIC, APRA with the upper hand, and on the other side the Advice Industry that have seen nothing but punishment, and no meaningful reform. It’s way time they leave us alone and go pick on somebody else.
The keystone cops aka ASIC are alive and well…! So glad I don’t have to worry about those morons any longer since I retired. Perhaps the FAAA and AIOFP (plus the other twelve associations) could collectively gang up against them and mount a campaign to change to another solution because the current ASIC model is clearly broken as proven by their blatant lies.
Why do advisers pay for unlicensed advice this should be shared across all areas of funded at all by practitioners doing the RIGHT thing
What’s the breakdown of reports. If this is not publicly available then the response is a bold faced lie. I’m calling BS given afca reports massively down except for Dixon where ASIC did nothing so shouldn’t be a factor. Is the aiofp or faaa asking for this??
Stupid justification to charge Advisors another Levy
Worst money ever spent.
I reported an adviser working from in prison (qualified adviser, but imprisoned), took them over a year to ban them.
I reported a blatant fraud, insider trading, among a large number of breaches, took 6 years to close them down.
I won’t bother in the future, its not worth it
Melissa Caddick says hello…
All those complaints to ASIC about Dixon and complaints about Caddick have resulted in one thing for advisers – increases in the adviser levy.
Better off not telling anybody when you see rubbish if it’s going to hit you hip pocket
What is sickly immoral mess
They’ll get you if you tell through the ASIC levy and through the CSOLR if you don’t. So either way we’ll pay.
Driving the levy up
same experience.
How can ASIC substantiate its claim of significant reports of misconduct of financial advice matters compared to other sectors, when AFCA complaint statistics prove the exact opposite?
I think Senator Brockman has flushed ASIC’s bias and corruption out into the open. Now it’s time for a complete cleanout and overhaul of ASIC. Australian consumers need a regulator that will make it easier for them to access professional advice, and protect them from the real sources of harm.
ASIC’s bias is clearly stated:
“The factors we consider when deciding whether to investigate and take enforcement action vary …, giving particular attention to matters that align with our strategic and enforcement priorities.”
That is, their “strategic and enforcement priorities” are to bury licenced financial advisers but unlicenced advisers and instos are not a priority.
I also note ASIC refer to the Royal Commission into Banking and Financial Services Misconduct is now referred to as the Financial Services Royal Commission.
This is just a spin from the confused and conflicted ASIC team; they only go after low-hanging fruit, and the big conman, which is the top end of town, gets away with everything.
Investigating these “unlicensed operators”, ASIC said in response to another question on notice from Brockman, cost a total of $4,488,157 in the 2022-23 financial year – which was charged to the financial advice sector.
Frankly the whole premise under questioning by ASIC is laughable and boils down to Un licensed operators.
If their unlicensed technically there’re out of ASIC jurisdiction and certainly if their unlicensed we should not have to be paying for action against them – soon ASIC will want us to pay for everything.
So – they will make fully licensed and people who are qualified to give advice, pay for the people who pretend that they are licensed. That makes sense. ASIC are non qualified morons who have no idea what is going on. Financial Planner made up the smallest amount of complaints in comparison to accountants and lawyers. Let’s go after the ‘low hanging fruit’ because it is easier.
Dear ASIC,
Australians lost $2.7 Billion in 2023 to Scams.
Yep $2,700,000,000 Asutralians lost and ASIC please confirm how much of that loss was caused by Advisers ?
AFCA Adviser complaints = 0.38% (excluding Dixons which we all know is really a MIS Failure)
ASIC are OFF THEIR HEADS.
Right. So enforcement and investigation of Unlicensed Financial Advisers’ costs somehow need to be born with the Licensed Field? ie when somebody gives advice with no qualifications or experience and is non compliant therefore, the adviser doing the right thing need to subsidise this? ASIC has lost the plot.