Business groups, including the AICD, have responded to Federal Treasury’s Consultation Paper, Proposed Industry Funding Model for the Australian Securities and Investments Commission.
The Federal Government’s plan to adopt an industry-funding model for the corporate regulator has raised some concerns among the business community.
The proposed ‘user-pays’ model for the Australian Securities and Investments Commission (ASIC) would mean that industry will fund the regulator through two streams: levies for each sector, and fees for ASIC services.
In its submission to Federal Treasury, the Australian Institute of Company Directors said that while it supports the proposal in principle, more consultation is needed and more “meat on the bones” is required to convey how the new model will work in practice.
“We support a funding model that ensures the regulator is well funded and has the necessary financial resources to perform its regulatory and oversight role in the capital markets,” said AICD’s General Manager, Advocacy, Louise Petschler.
“However, it should be acknowledged that any industry funding may ultimately be passed on to consumers as these fees and levies are likely to be incorporated into the cost base of corporate entities.”
Once the funding model has been determined, the AICD proposes that additional processes or performance metrics should be put in place to ensure ASIC manages its costs in a transparent way.
“The consultation paper is silent on what checks and balances will be included in the system to ensure that ASIC accurately accounts for its costs in a manner that enables companies to accurately determine the costs that ASIC incurs in the performance of its regulatory activities,” said Petschler.
Various market participants have questioned this approach.
“There is concerned that this change may impede ASIC’s independence and that certain market participants may be able to assert undue influence on the regulator,” said Petschler.
“It is important that when developing this model, that these concerns are addressed and that appropriate measures be put in place to minimise this risk.”
The AICD has proposed that a longer transition period be considered to enable ASIC to monitor for any unintended consequences of the changes.
For more information, see AICD’s submission in response to Federal Treasury’s consultation paper, Proposed Industry Funding Model for the Australian Securities and Investments Commission.
Already a member?
Login to view this content