Underfunded regulator to hunt credit reps

ASIC’s $120 million funding cut will see the corporate watchdog further pursue credit reps rather than licensees, according to QED Risk Services.

Speaking at a non-bank panel during last week's MFAA convention on the Gold Coast, QED Risk Services director Greg Ashe said it is a common myth that ASIC targets licensees.

“It’s not licensees they are after; its industry participants that they look at,” Mr Ashe said. “If you’re merely a credit rep and you do something wrong to a consumer, ASIC will come after you.

“They are not going to come after your licensee first, they will come after the credit rep first.”

Mr Ashe said another common misconception is that ASIC is entirely taxpayer-funded.

“ASIC is mostly industry-funded,” he said. “They get most of their money by charging brokers an annual licensing fee, by charging the banks their licensing fee.”

The corporate regulator has been instructed to "adjust its priorities" as the federal government withdraws $120 million in funding over the next five years.

In the federal Budget handed down last week, the government indicated it would achieve $120.1 million in savings over five years by reducing funding to ASIC – starting with a reduction of $26 million in 2014/2015.

"ASIC will adjust its priorities to ensure it continues to meet its statutory objectives," the Budget papers stated.

"The savings from this measure will be redirected by the government to repair the Budget and fund policy priorities."

ASIC's average staffing level for 2014/2015 is estimated to be reduced by 209 from 2013/2014 levels, falling from 1,782 to 1,573.

“They didn’t have much of a budget anyway,” QED’s Mr Ashe said. “They are severely underfunded.”

 

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