Business will pay for boosting the enforcement capabilities of Australia’s corporate watchdog, the federal government has announced. And it will get an exemption from public service provisions on hiring.
The government is also requesting the term of chairman Greg Medcraft, who has been the subject of significant criticism for the failures of the agency, be extended a further 18 months.
With Labor running hard on its policy of a royal commission into the banking sector, the government has countered with a $127.2 million investment in the Australian Securities and Investment Commission and picking up on broader reform recommended by a capability review commissioned last year.
In a joint statement, Treasury Scott Morrison and Assistant Treasurer Kelly O’Dwyer said the measures will “equip ASIC with stronger powers and funding to enhance surveillance capabilities, better enabling our corporate watchdog to combat misconduct in Australia’s financial services industry and bolster consumer confidence in the sector”.
Five recommendations from the capability review will be adopted immediately, focusing on governance, recruitment and annual performance discussions with Morrison.
The agency is also being removed from the Public Service Act. The government says this will support ASIC to “more effectively recruit and retain staff in positions requiring specialist skills”. The move follows a finding in the Financial System Inquiry from 2014.
Of the funding commitment:
- $61.1 million to “enhance ASIC’s data analytics and surveillance capabilities” and “modernise ASIC’s data management systems”;
- $57 million for “increased surveillance and enforcement on an ongoing basis in the areas of financial advice, responsible lending, life insurance and breach reporting”; and
- $9.2 million to ensure ASIC and Treasury “can implement appropriate law and regulatory reform”.
As recommended by the FSI, the government will introduce an industry-funded “user-pays” model for the agency, to commence in the second half of 2017. Costs will now be recovered from all industry sectors regulated by ASIC. The joint statement said:
“Industry funding ensures that the costs of regulation are borne by those entities that have created the need for it, rather than the Australian public.”
Medcraft will stay in the job longer because “the government recognises that continuity of ASIC’s leadership is necessary to provide support for the implementation of these important reforms and to bolster consumer confidence”.
The government will also appoint an additional ASIC commissioner with “experience in the prosecution of crimes in the financial services industry”.