A cut in federal government funding means ASIC’s “proactive surveillance will substantially reduce” across the sectors it regulates and “in some cases stop”, says ASIC chairman Greg Medcraft.
InvestorDaily reported last month that the federal government will withdraw $120 million in funding from ASIC during the next five years in its federal Budget.
Mr Medcraft said in a statement to the Senate Estimates Committee this will mean a cut of 15 per cent or $44 million in ASIC’s operating budget for the 2014/2015 financial year.
This also means average staffing levels will fall by 209, from 1,782 down to 1,573, according to Mr Medcraft.
“In anticipation of this cut, we have been proactive in conducting a voluntary redundancy campaign,” said Mr Medcraft.
“Over the coming weeks, we will be working with our business units to meet the remaining Budget reduction.”
He said while ASIC can still perform its statutory functions and will adjust its resource allocation to reflect the available funding, “some change is inevitable”.
ASIC will rely more on intelligence it receives from misconduct reports and complaints, limit its risk-based approach to focus on entities or activities with the greatest market impact and continue to ensure consequences are severe where the law has intentionally been broken, said Mr Medcraft.
While he did not identify to the market the areas where ASIC would not conduct proactive surveillance, he did note there would be reduced proactive surveillance within ASIC’s deposit takers, credit and insurance team.
“This team will focus on activity by entities that have the greatest market impact at the expense of smaller entities that have smaller customer bases” said Mr Medcraft.
“In our markets cluster we will be doing less proactive surveillance of debenture issuers, and fewer document reviews, for example prospectuses.”
He also said there will be reduced levels of service to registry customers and fewer process improvement activities, such as to online services.
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