The corporate regulator needs to demonstrate that its levies are set and spent appropriately and that it is improving the efficiency of its regulatory effort, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA said in its submission to the Australian Securities and Investments Commission’s (ASIC’s) industry funding for 2020-21 that it would be appropriate to apply a high level of scrutiny to the cost recovered from the Australian Securities and Investment Commission (ASIC) levies.
“ASFA considers that it is incumbent on ASIC to demonstrate transparency and accountability regarding its regulation of the superannuation industry (and the broader financial system),” it said.
“To this end, ASIC needs to demonstrate that the levies are set and spent appropriately and it is improving the efficiency of its regulatory effort – including by minimising the impact of regulation on the regulated population.”
In terms of superannuation trustees, ASIC estimated its levies would total $29.2 million for 2020-21, up from $23.8 million for 2019-20 – a 23% increase.
ASFA noted that super funds paid additional ASIC Industry Funding Model (IFM) levies related to the provision of advice services and insurance, and the operation of investment platforms. ASFA said it estimated the additional ASIC IFM levies would total $5 million for 2021 and thus the total ASIC IFM levies on super funds would be around $35 million for 2020-21.
Ultimately the increased levies, it said, would be borne by super fund members though administration fees and would be reflected in members’ future retirement incomes.
“As such, ASFA considers it appropriate that a high level of scrutiny should apply to the costs recovered from industry via the ASIC IFM levies. In this regard, it is incumbent on ASIC to demonstrate transparency and accountability regarding its regulation of the superannuation industry (and the broader financial system),” ASFA said.
“In addition to demonstrating that levies are set and spent appropriately, ASIC needs to demonstrate that its mix of regulatory tools is appropriate – particularly given its relatively heavy reliance on enforcement as a regulatory tool.
“ASIC also needs to demonstrate that it is working to improve its regulatory efficiency – by cooperating with other regulators to exploit regulatory synergies and minimise the impact of regulation on the regulated population.”
ASFA noted the ASIC Capability Review said ASIC should consider whether regulatory outcomes could be achieved by using existing regulation administered by another regulator, or other collaborative arrangements, to ensure an integrated regulatory framework and to reduce costs for regulated entities.
“Ultimately, greater recognition of synergies would allow Australian regulators to allocate their resources to where they are most needed, and would lead to a more efficient regulatory environment,” it said.