Australia’s banking and financial sector has been plagued by a string of scandals and allegations of impropriety over the past year.
Now the Federal Government says it has a plan to fix it, with a major injection of new funding to Australia’s financial monitor, the Australian Securities and Investments Commission.
Treasurer Scott Morrison says it is the result of a major review into the commission’s operations.
“No longer will it be the case that taxpayers will be hit to fund this regulator and this enforcement authority, this cop on the beat. Those whom it’s enforcing the regulations and rules on will pay the price for that. They will fund the continued resourcing of ASIC as a tough regulator on the beat.”
The levy will provide 121 million dollars over four years to the financial regulator.
That will fund advanced data-analytic and surveillance capabilities, as well as investigation and prosecutional capacities to pursue matters in the courts.
A new commissioner will also be tasked with investigating banking misconduct.
The Federal Government has been under pressure to shake up Australia’s financial sector.
Earlier this month, Labor announced it would hold a royal commission into banking impropriety if it wins the upcoming federal election.
It had wide support in opinion polls.
Opposition Leader Bill Shorten says the Government’s newly announced funding will only balance out cuts to ASIC it made earlier.
“A royal commission will deliver the truth, and that’s what tens of thousands of Australians who’ve experienced adverse treatment at the hand of banks and financial institutions deserve. Mr Turnbull today has sold out Australians in favour of the big banks. His proposed Clayton’s* announcement is merely restoring cuts that they made.”
The head of ASIC, Greg Medcraft, had said previous cuts to the regulator’s budget had affected surveillance powers.
His term has now been extended to help complete the ASIC changes.
He says the funding injection meets ASIC’s needs.
“That expands our surveillance and enforcement capabilities, so we’re absolutely delighted in that. The acceleration of the Government’s law reforms, the money for that, we’re delighted.”
Australian Bankers’ Association chief executive Steven Munchenberg says the sector broadly supports the decision.
He says banks will be sourcing most of the funds initially, and then the financial sector.
But he says the cost to banks can only be absorbed in two ways.
“There’s only two places it can come from — customers or shareholders — so, I mean, banks are going to have to just deal with this as an additional cost. While $120 million is obviously very significant for ASIC, when you spread that across over a trillion dollars’ worth of loans and things that the banks have got out, I don’t think … it probably doesn’t make a material difference. But, look, we’ve heard what the Treasurer’s said, the banks will have heard what the Treasurer’s said, ultimately they’re going to have to make the call. But I think the message from the Treasurer was very, very clear.”
That message is customers should not face additional or excessive fees because of the administration costs of banks.
But Mr Munchenberg says he does not expect it to impact shareholders’ returns or interest rates.