Brought to you by:

ASIC levy: advisers want more transparency over enforcement costs 

The Australian Securities and Investments Commission (ASIC) lacks transparency over its use of resources to monitor corporate behaviour, the adviser peak body says. 

Financial Advice Association Australia (FAAA) CEO Sarah Abood says ASIC collects levies via an industry funding model but provides little details on how the money is spent. 

“More transparency would allow for any errors to be picked up ensuring costs are being shared fairly, improving confidence in the system,” she said in a statement to the Senate Economics References Committee. 

She says the regulator apparently spent $55.5 million on oversight of financial advisers in the last financial year. 

“This is more than it spent on any other sector including listed companies, super funds, insurers, and the wholesale sector,” Ms Abood said. 

“As a result the ASIC levy for financial advisers has almost tripled since an earlier freeze, to over $3200 per adviser. 

“We think that our members may be paying for expenditure that should not be attributed to them. However, we have no visibility of how ASIC attributes its enforcement costs, and very little information is provided to the regulated population on how its money is being spent.” 

Advisers have long highlighted the levy burden facing their practices and the Government’s decision not to extend the temporary levy freeze at $1142 per adviser has exacerbated their cost concerns. 

The industry is set to pay about $3217 per adviser for the 2022/23 year. Levy fees have been frozen at 2018/19 levels under a two-year relief scheme introduced by the previous Coalition Government and the measure applied to financial years 2020/21 and 2021/22. 

Ms Abood, who made her comments before the Senate committee, also called out other areas where ASIC can improve. 

She says ASIC could better leverage and more transparently report intelligence from the financial adviser population. 

“Our members are proud to be considered and trusted as professionals, and are well-placed and highly motivated to identify and stop problems in our sector early,” Ms Abood said. 

“They often ask us to pass on information about misconduct to ASIC. However, in most cases no further information is provided or requested by ASIC and we are unaware of whether any action has been taken.” 

Ms Abood says ASIC should also more tightly focus and prioritise its activities to areas that pose the highest risk of consumer harm given its limited resources. 

“Since the breach reporting regime was overhauled in October 2021, licensees are now required to report much less serious matters to ASIC than previously,” Ms Abood said. 

“Breach reports have now tripled, and we are concerned that this has resulted in ASIC being overloaded with reports of minor administrative and technical breaches.” 

The Senate Economics References Committee is leading an inquiry into the capacity and capability of ASIC to undertake proportionate investigation and enforcement action arising from reports of alleged misconduct.