ASIC, FCA and the ACCC all felt the sting of the 2014-15 budget
With future funding for some of Australia’s key consumer protection agencies under threat, CHOICE outlines what we'd like to see from the 2015-16 federal budget.
Australian Securities and Investments Commission (ASIC)
What CHOICE wants:
- The 2014-15 federal budget called for a $120 million dollar funding cut to ASIC over four years, as well as an additional $47 million “efficiency dividend” reduction. Over the current financial year the regulator has had to cut 212 full-time positions, including significant cutbacks in proactive surveillance activities.
- ASIC chair Greg Medcraft has made the case that ASIC was already underfunded and understaffed before the cuts, despite an increasingly complicated financial sector and plenty of consumer risk – especially from the financial planning divisions of Australia’s biggest banks.
- In 2012 an International Monetary Fund report concluded that ASIC has earned its reputation as an effective regulator but “is hampered in its ability to fully carry out proactive supervision because of the lack of budgetary resources.”
- Continuing the 2014-15 cuts would mean that less than 2% of financial advice licensees will be subject to proactive surveillance by ASIC.
We don’t think community expectations of ASIC match the current level of funding. We'd like to see ASIC funding in the 2015-16 budget increased to pre-2013-2014 levels with consideration given for inflation.
And, since staffing reductions occurred proactively in the lead-up to the 2014-15 budget, we also believe additional funding should be flagged to restore ASIC staffing to 2013-14 levels and to allow for increased surveillance activity.
Australian Competition and Consumer Commission (ACCC)
- ACCC was subject to a 12.5% reduction in staff as part of the efficiency dividend measures in the 2014-15 budget.
- The scope of the regulator’s jurisdiction is widening, including recent investigations into cartel behaviour, comparator websites, and drip pricing by airlines and others (in which extra charges on top of the listed retail price are stealthily tacked on during online transactions).
What CHOICE wants: The ACCC should receive additional funding in the 2015-16 budget to increase staffing to 2013-14 levels.
Financial Counselling Australia (FCA)
- Funding for the nation’s free financial counselling service was left in limbo with the 2014-15 budget – and so far there’s no certainty that the upcoming budget will put FCA’s fears to rest.
- Financial counsellors assist an estimated 50,000 people through face-to-face services and 120,000 people through telephone services every year. A recent cost-benefit analysis of a South Australian financial counselling service found that the program generated five dollars in benefits for every dollar of cost.
- FCA chief executive Fiona Guthrie told CHOICE the organisation is cautiously hopeful that funding will continue. “All indications are that the government understands the important role played by FCA in supporting frontline financial counselling services. The organisation, however, may not have any definite indication about its ongoing funding until the budget.”
What CHOICE wants: The government should restore funding for the financial counselling sector and FCA to 2013-14 levels, and further funds should be granted to allow FCA to coordinate training, improve communication and information sharing and develop new tools and resources.
What else CHOICE wants for consumers from this budget:
CHOICE is calling for no further cuts to government-supported bodies whose job it is to protect consumers! The list includes:
- Australian Communications and Media Authority (ACMA).
- Food Standards Australia and New Zealand (FSANZ).
- Government-supported ombudsman schemes such as the Telecommunications Industry Ombudsman and the Financial Ombudsman Service.