This was published 7 years ago
Make the banks pay for ASIC's funding, say industry funds
The $400 billion industry superannuation sector is pushing for the big banks to bear the "lion's share" of funding the corporate watchdog, arguing they cause more problems for the regulators.
The federal government wants the Australian Securities and Investments Commission (ASIC) to move to a self-funding model and closed consultation on how that might work just before Christmas.
Industry Super Australia used its submission to that inquiry to sharply criticise the government's proposal that the fee for superannuation trustees be weighted according to how much money funds are managing.
For a fund with $2.5 billion under management the annual fee would be $29,250, while for a fund with $34 billion in funds under management the annual levy would be $186,750.
ASIC chairman Greg Medcraft is cracking down on unrealistic valuations in financial reports. Credit: Alex Ellinghausen
The peak body for industry funds argues instead that the companies that occupy ASIC's time should pay more through a user-pays model.
"ISA strongly supports a levy that reflects the differences between the different models within the sector, with greater weighting of the levy targeting those areas where there is greater risk of misconduct and a stronger need for regulatory supervision," it said.
"ISA believes that the government is misguided in its decision to apply a one-size-fits-all cost model in relation to the ASIC levy for the superannuation sector."
That model could take into account how many enforcement or breach actions an entity faced, how much compensation they paid and how often they were investigated.
ISA chief executive David Whiteley said the big banks should pay the "lion's share" of the funding requirement for ASIC.
"In the last five years there has been a whole range of scandals in the banking sector that have not occurred in the super funds," he told Fairfax Media.
A recommendation for the Murray review of the financial system was that ASIC be supported through an industry funding model.
Another way of raising revenue proposed by ISA would be to ramp up penalties for wrongdoing and include the ability to claw back profits from bad behaviour through a process known as disgorgement.
In America, for example, penalties were far tougher, as demonstrated in the recent Wells Fargo scandal.
ISA argues in its submission that its superior returns to super fund members from the not-for-profit funds showed there was little need for surveillance or enforcement in the sector. This, it argued, was in contrast to the banks.
"The vertically integrated business model of the banks has resulted in conflict-ridden distribution, allocations into high fee and low performing wealth products, expensive banking products, and undermined trust and confidence in financial services," ISA's submission said noting that these conflicts had produced several scandals.
The Australian Bankers Association – the peak body for the nation's banks – argued a similar point around ensuring that those who should pay the most were those requiring the greatest scrutiny and posing the biggest risks to the financial system.
"The ABA continues to question whether these metrics accurately align with regulatory effort," it said in its submission.
The banks also complained that the system was too complex and that it would take a great deal of work simply to calculate the various levies they would have to pay.
The ABA also sought to get tax deductions from the federal government to the levies they paid to support ASIC's operation.
"Prima facie, being a cost of doing business, the levies and fees paid to ASIC should be tax deductible," its submission said.