ASIC has backed government proposals which will see the regulator switch to an industry funded model, replacing the taxpayer funded model in which it currently operates.
A model that provides more transparency and certainty around ASIC’s funding is something that was recommended in David Murray’s Financial System Inquiry and the Senate Economics References Committee Inquiry into the performance of ASIC. The government has now released a consultation paper on a proposed industry funding model for the organisation.
The proposed industry funding model will be based on the government’s Cost Recovery Guidelines, where the cost of ASIC's regulation will be recovered directly from sectors and entities that create the need for regulation. This will be via a system of industry levies and fees.
“An industry funding model is about ensuring that those industries that need the most regulation should pay for it, rather than taxpayers,” ASIC chairman Greg Medcraft said.
“It is about establishing a price signal for regulation which we think will drive economic efficiencies in the way resources are allocated in ASIC.
“And an industry funding model will also improve ASIC's transparency and accountability. That means business will better understand the job we do by having greater visibility of the cost of doing that job.”
Currently, only 15% of ASIC’s regulatory costs are recovered through industry levies and fees. According to ASIC, the cost of using its resources has grown significantly out of line with the revenue collected from sectors regulated.
Further, ASIC’s regulated population has also increased in size and complexity yet funding has not increased accordingly.
The government is now seeking consultation from the community on the potential introduction of an ASIC industry funding model, before making any decision, and is urging all industry and other stakeholders to take part in the consultation.
The closing date for submissions is 9 October 2015.