ASIC a cash cow gouging millions in excessive fees

The Australian, April 24, 2018

The federal government runs the corporate regulator — under fire over its failure to police or prevent many cases of fraud and corruption already uncovered by the banking royal commission — at a $600 million-plus annual profit, by gouging the public and small business owners in fees.

The Australian Securities & Investments Commission’s results for last financial year show the government provided it with total funding for the year of $341.6m — but ASIC handed $948.6m to the government from fees and charges it had levied on the public, a $607m windfall — or $38 a year for every Australian adult.

The figures place in context the endless political debates over ASIC funding costs, given not only does ASIC not cost the federal government anything to run, it runs it at an enormous profit at the expense of the public.

Financial Services Minister Kelly O’Dwyer, who is under fire for failing to say the government was wrong to have opposed the banking royal commission, did not respond yesterday when asked if the government thought it was ­appropriate to be overcharging the public by hundreds of millions of dollars a year. Her spokesman said the government had “always ­insured ASIC has the funding it needs to do its job”.

“The government recently passed legislation implementing an industry funding model to put ASIC on a secure footing,” the spokesman said. That new ­approach means the government’s profits from ASIC will increase, with industry now being required to fund the regulator, with all costs ultimately passed on to the public. Opposition Treasury spokesman Chris Bowen also would not comment when asked whether the ALP considered such gouging inappropriate, or ­whether Labor would make any changes if it won the next election.

ASIC’s 2016-17 results show it made $801.7m in “fees” and $118.5m from fines it had issued.

The vast majority of the $801.7m comes from fees ASIC charges companies — the overwhelming majority of them small businesses — for registration and document handling and for fees it charges the public for access to “public” information it stores on the ASIC companies register.

Those charges, potentially hundreds or thousands of times greater than the cost of providing the services, hit organisations such as media outlets particularly hard because many journalists rely on information included in the ASIC database when researching stories.

The fees ASIC charges to ­access the register are among the highest in the developed world, with the red-tape constraining the free flow of public information.

The cost of operating the database is so low ASIC’s 208-page ­annual report does not even break down that cost.

The government in 2014 announced ASIC funding would be cut by $120m over four years. Steven Ciobo, then secretary to the treasurer, told business the government favoured more “self- regulation”. Some of those cuts have been reversed, but the $341.6m provided by the government last financial year remained below the $350m in funding in 2012-13, before the cuts.

Mr Bowen said the government was “still trying to play catch-up on ASIC funding” following “the initial $120m cut the Abbott government made”.

In 2014 then ASIC chairman Greg Medcraft told journalists Australia was a “paradise” for white-collar criminals because of its soft-touch on corporate crime.