FPA welcomes strengthened powers and increased funding for ASIC but cautions a user pays model that disadvantages small business
The Financial Planning Association of Australia (FPA) has welcomed the Government’s announcement of a reform package to strengthen the Australian Security and Investment Commission (ASIC), calling it a more sensible solution than a Royal Commission.
FPA CEO, Dante De Gori CFP®, said: “The measures announced will provide ASIC with stronger powers, and the funding to enhance surveillance capabilities. This will serve to reinforce consumer protection even further, over and above the extensive reforms already in place.
“As our chief regulatory body, ASIC plays a critical role in consumer protection. We support the Government’s decision to fast track product intervention powers for ASIC. It is important that product manufacturers and other gatekeepers in the value chain take responsibility for their actions and are held accountable when products fail.
“The proposed user pays model provides in principle a sensible long term solution to the financial security of the regulator, however the FPA is keen to better understand the model and how it will ensure equity and fairness for small business operators. In particular the funding model must not stifle competition or prohibit future entrants into the financial services industry.
“The FPA has requested Government consider possible exemptions for small business operators similar to the model used by AUSTRAC, who is the regulator for AML and counter terrorism legislation.
“The FPA participated in the ASIC Capability Review Report process and supported measures to boost ASIC’s ability both to improve and to police the standards of behaviour and accountability throughout the financial services industry for the benefit of the consumer,” said Mr De Gori.
Mr De Gori concluded by saying that the reform package will lead to significant improvements in consumer outcomes. “The financial planning profession has been subject to 54 inquiries, reviews and consultations and we believe now is the time to move forward with workable reform measures like this as soon as possible.
“We are working with the Government and industry to ensure that we continue to show Australian consumers that we are serious about lifting advice standards in the industry to provide them with access to trusted and quality advice,” said Mr De Gori.
The Government’s $127.2 million reform package to strengthen ASIC includes:
- $61.1 million to enhance ASIC’s data analytics
- $9.2 million to ASIC/Treasury to implement law and regulatory reform
- $57 million to enable increased surveillance and enforcement on an ongoing basis, of financial advice, lending, life insurance and breach reporting
The five recommendations to Government in the ASIC Capability Report will be implemented immediately. The Government will:
- update and enhance the Statement of Expectations of ASIC; and will consider providing an annual ministerial statement on ASIC performance, to Parliament
- consider the number of Commissioners needed as part of the appointment process each time a Commissioner’s term ends
- appoint the best available person to key positions and follow Government Merit and Transparency Guidelines
- ensure the Minister meets with ASIC’s Chairperson at least annually to discuss the performance of Commission
- remove ASIC from the Public Service Act, which will help ASIC recruit and retain specialist staff