The announcement of an additional $127.2 million in funding for ASIC has been welcomed by the Australian Bankers’ Association (ABA) as well as both retail and industry superannuation groups.
The ABA said it “supported” both expanding the powers of ASIC, as announced yesterday, as well as increasing the regulator’s resources.
“The banking industry supports, in principle, the product intervention power for ASIC to bolster consumer protections. However, we need to be wary of any action that may have unintended consequences and adversely impact on product innovation or consumer choice,” the ABA said.
“We also support a new obligation on product manufacturers, including banks and other financial institutions, to ensure design and distribution of financial products meets the needs of all consumers,” it said.
But Governance Institute of Australia chief executive Steven Burrell warned that the “one-off” funding boost of $127.2 million does not address the “urgent need” for a “sustainable long-term funding model” for the regulator.
“The $127 million funding increase is a positive move but at the end of the day, all it does is restore ASIC’s coffers to their level prior to the 2014 budget cuts,” Mr Burrell said.
“Importantly, it misses the opportunity to take up the Financial System Inquiry’s recommendation to introduce a three-year funding model supported by a user-pays system so that ASIC has long-term financial certainty and is not subject to government revenue swings.
“ASIC needs more money when it is busiest in a downturn, which is exactly when Canberra dips into deficit and tightens the screws on expenditure.
“The seeds of misbehaviour are sown when markets are strong, but by the time the economy is in bad shape and ASIC needs more resources to sort out the wreckage from the boom times, government funding has dried up,” Mr Burrell said.
The regulator must be “visible and active” in order to police and enforce high standards of corporate conduct, he said.
“ASIC needs to be given the chance to do its job properly, now and into the future, and this boils down to a simple question of stable long-term funding. We urge the government to go beyond a one-off funding boost and back a sustainable funding solution for ASIC without delay,” Mr Burrell said.
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