Regulator to wring bill from business
Banks, big business and financial services are being called on to pay for their own regulation.
Assistant Treasurer Josh Frydenberg has proposed a $260 million user-pays system to fund the corporate regulator, ASIC.
“[This] follows through on one of the key recommendations of the Financial System Inquiry, which found that an industry funding model could boost accountability, drive efficiencies, and strengthen ASIC's capabilities,” Mr Frydenberg has told Fairfax reporters.
“Importantly, an industry funding model would put ASIC on an equal footing with comparable regulators in other jurisdictions, such as the United States and the United Kingdom, as well as APRA in Australia,” he said.
The full user-pays system has advocated by ASIC chairman Greg Medcraft, and is expected to clear the way for the federal government to sell ASIC's registry arm, a move that should be worth about $3 billion.
The government's proposal will see industry players contribute around $200 million of ASIC's budget, with the remainder coming from fees for registrations, licence applications and other services.
It means the 2000 public and private companies on the ASX will be slugged with a $53 million bill.
Under the proposal to be announced today, the government suggests a maximum contribution of $320,000 for companies with a market capitalisation of over $15 billion.
Despite the relatively minor fee for such wealthy companioned, outfits that hold over that amount - such as Suncorp, Transurban, AMP, Westfield, Amcor and Brambles – are crying poor.
The financial services industry will be hit up for some serious funds, with licensees like investment banks, stockbrokers, insurers and the super and planning industry to contribute $91 million.
It is understood that ASIC would calculate each businesses’ bill based on an assessment of the risk each sector poses for investors (as ordained by an industry panel), which is reviewed each year.
Mr Frydenberg’s consultation paper reportedly calls for submissions by early October, but suggests no alternative funding models and so appears to be a done deal.
“Frankly those that generate the need for regulation should pay for that regulation. The levy is actually the predominant method for regulators being funded around the world, it is transparent,” Asic chairman Greg Medcraft has said.
“Fees will be tiered to align the cost of ASIC's work with the sectors that drive the cost.”
The Australian Bankers' Association is unhappy.
“ASIC can just say 'we need more resources to investigate this issue, we need to raise the levy' but how do we know we are not just creating a fat and lazy regulator,” ABA chief Steven Munchenberg told the Financial Review.
“If the government doesn't bear the cost of new regulation, then there is no disincentive against more regulation. You also have the government undertaking a capability review of ASIC, so you think they would complete that before deciding to move to an industry-funded regulator.”