In a rare move, UniSuper has commented on the government’s decision to increase funding to the Australian Securities and Investments Commission (ASIC) by $120 million over four years through a levy.
The government announced on Wednesday that it would increase funding in an attempt to head off calls for a Royal Commission into the financial services sector.
Kevin O’Sullivan, chief executive of the $50 billion fund, said the super fund had indicated it would be concerned about the negative financial impact and management distraction which could arise from a comprehensive Royal Commission into the financial services sector so soon after the Murray Inquiry.
“The test for us at UniSuper is always ‘Is this in the best interests of our members?’” said O’Sullivan. “We do not believe that a Royal Commission into the sector passes this test at this stage in the lifecycle of the current model.”
He added all current industry issues were reviewed as part of David Murray’s Financial System Inquiry, with relevant recommendations made, and as such they deserved the appropriate time and resources to be implemented.
Meanwhile, the Association of Superannuation Funds of Australia (ASFA) and the Australian Institute of Superannuation Trustees (AIST) have both welcomed the increase in funding to ASIC.
Pauline Vamos, chief executive of ASFA, said in particular the peak body was pleased there will be greater funding (an additional $5.2 million) for the Superannuation Complaints Tribunal (SCT) to clear the current backlog of cases.
The SCT received 2,907 complaints in the 2014–15 financial year including 1,743 which fell within its jurisdiction. 286 complaints were resolved at review.
Vamos said: “The SCT is a service of critical importance to APRA-regulated superannuation funds and their members. Future funding needs to reflect the rise in time taken to resolve complaints due to the complexity of issues and increasing numbers of those registering a beneficial interest.”
ASFA also noted the implementation of the Financial System Inquiry recommendation for a full user-pays model for the funding of ASIC, but raised concerns about transparency at ASIC.
“ASFA has expressed concern about the lack of transparency and accountability inherent in the current process by which levies are applied and utilised,” Vamos said.
“With this in mind, ASFA welcomes the deferral of the industry funding model until 2017, and looks forward to engaging with the government on the details of the funding model.”
AIST also raised concerns on this point.
Tom Garcia, chief executive of AIST, said that additional funding risked being ineffective without commensurate increases in the level of transparency and accountability around ASIC’s activities.
“We agree with the findings of the Financial System Inquiry, that ASIC’s costs are not transparent to participants in the financial services sector,” Garcia said. “However, we must ensure the funding of ASIC is not built up as a solution to all problems facing the financial sector – there are still systemic problems that have to be dealt with that are outside the regulator’s brief.”
Noting that the government will be introducing a user-pays funding model for ASIC, Garcia reiterated calls for a “cost recovery impact statement” (CRIS) – in line with the government’s own cost recovery guidelines.
“A better understanding of the basis for ASIC’s costs and how these are spread across the range of activities that ASIC needs to perform would go a long way to improving the public’s trust in the financial services sector,” said Garcia. “The publication of a CRIS – coupled with implementation of the Regulator Performance Framework issued last year – would greatly assist with how ASIC’s resources are focused.”
