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Of course user -pays ASIC is a huge risk of CAPTURE...This mad hatter Morrison thought bubble already
is in backfire mode in just announcing it....they must think we the people are imbeciles....
Former Asic insider says Turnbull government's user-pays plan will backfire
Asic’s former chief economist says asking the banks to pay for regulator puts it at risk of ‘capture’ by financial industry and won’t fix widespread misconduct
Gareth Hutchens
21 April 2016
The Turnbull government’s plans to shift the Australian Securities and Investments Commission onto a user-pays funding model will fail to fix the poor conduct plaguing the financial industry, a former Asic chief economist has warned.
Economist Alex Erskine, who was Asic’s chief economist between 2007 and 2013, has also warned the user-pays model will increase the likelihood that the regulator may be “captured” by the banks it is supposed to be regulating.
The Turnbull government announced sweeping reforms to Asic on Wednesday, promising to boost the regulator’s surveillance powers with a multimillion-dollar technological upgrade that will restore some of the funding stripped in Tony Abbott-era cuts.
It also promised to appoint an extra commissioner to Asic with experience in the prosecution of financial crimes.
The treasurer, Scott Morrison, said the reform package was a considered response to the problems plaguing the financial industry.
He said it was better than the proposal from the Labor leader, Bill Shorten, who has been calling for a royal commission following years of financial scandals inside Australia’s banks.
As part of the reform package, Morrison said funding for the regulator would shift to a “user-pays” model – in which the institutions it regulates will be forced to pay for the ongoing cost of their regulation – so taxpayers don’t have to fund its operations anymore.
Steven Munchenberg, chief executive of the Australian Bankers Association, says he knows few details about the way the user-pays model will work.
“We accept the model in principle, [but] obviously with these sorts of things the devil is in the detail,” he said.
“We’ve always been concerned about how it’s going to apply, and it has always raised questions in our minds about well, if we’re paying, how can we have a guarantee that the regulator will use those funds efficiently?”
He said was waiting, like everyone else, to hear more details from the government.
And former Asic chief economist Alex Erskine said he was concerned the proposed model will increase the risk that the regulator may be ‘captured’ by the banks it is supposed to be regulating. “In the end you’ll get deals between industry and Asic about where Asic’s tolerance for regulatory enquiry is,” Erskine said.
“I’m not totally against the idea, in fact I can see some good reasons as to why you’d want to do it, because at the moment some people who are causing regulatory problems are not being billed properly.
“But if the government’s [soon] going to be paying no part in Asic’s costs then in the end the government’s voice [over] Asic risks being reduced and industry’s voice over Asic risks being increased,” he said.
Labor treasury spokesman Chris Bowen has criticised the government for its proposed changes to the regulator.
“This is a plan to get Scott Morrison through an election, it’s not a plan to make Australia’s banks and financial system to work for every day consumers,” Bowen said.
“It’s not a plan to weed out bad practices and bad behaviour, it’s a plan to hobble through an election.”
Bowen also criticised the plan to charge Australia’s banks $121m to upgrade Asic’s technological surveillance capabilities.
“When it comes to the levy that the government announced, Scott Morrison and the Liberals have always claimed that these levies will be passed onto consumers,” Bowen said.
“That’s what they said when Labor in government instituted a bank deposit levy, insisted that it will be passed onto consumers.
“Scott Morrison said that he would get very, very cross with the banks if they passed it on.”