The Australian government has announced AU$127 million will be injected to the Australian Securities and Investments Commission (ASIC) over four years, of which AU$118 million will be specifically to ensure the financial services regulator is equipped with the latest technology, so it can be "proactive rather than reactive".
Assistant Treasurer and Minister for Small Business Kelly O'Dwyer said that of the AU$118 million boost, AU$61.1 million be will be used to equip ASIC with the latest data analytics and surveillance capabilities, and modernise its data management systems, as well as increase staff numbers to carry out data matching and surveillance; while the remaining AU$57 million will ensure ASIC will have the capabilities to maintain ongoing surveillance following the upgrades.
"It will allow for more systemic data collection. There will be data matching to detect if there are any particular problems with financial advisors or segments in the issue. It can look at systemic and specific issues with individual practitioners. It will mean ASIC will be able to target those areas of concern," she said.
"We have seen this with the ATO and we are bringing this now with ASIC to increase its capabilities to be more proactive than reactive."
The announcement is one of the federal government's responses to recommendations made by the ASIC capability review report. A total of 34 recommendations were made in the report, five of which were related to the federal government.
The review forms part of the federal government's response to the financial system inquiry, which recommended periodic reviews of the capability of financial regulators should be carried out.
Meanwhile, AU$5.2 million will be used to deal with legacy cases the Superannuation Complaints Tribunal currently has. O'Dwyer said the intention for the funds is for ASIC to invest the money into a more sophisticated data system to deal with those complaints, pointing out the Superannuation Complaints Tribunal is still handling cases dating as far back as 2012.
In addition to this, the government will be extending the Financial Ombudsman Service's (FOS) current jurisdiction to cover a wider range of small business loans, as well as conduct a review of monetary limits and compensation caps.
In further efforts to improve the way the existing financial sector handles customer complaints, a panel will be established to review the role, powers, and governance of Australia's dispute resolution and complaints scheme over the next six months, including how all the tribunals and ombudsman came come together as "one-stop shop". The panel will report back to the government at the end of the year.
"We want to put the consumer at the centre of our system to ensure they don't have to navigate a complicated path," O'Dwyer said.
On Wednesday, the federal government also announced it will appoint a new ASIC commissioner that will have experience with prosecution in financial crimes.
ASIC will also be excluded from the Public Services Act 1999, which according to O'Dwyer will mean the organisation will be able to recruit staff from outside of the public sector.
Australia's major banks are expected to back the funding via a levy to the tune of AU$121 million.
When asked whether this may result in banks passing the fees onto customers, Treasurer Scott Morrison said he would be "furious" if the banks tried, saying the levies will be "easily digestible" for the banks.
ASIC has welcomed the government's announcements, which it said will improve the regulatory body's capabilities.
"The Capability Review provided ASIC with the opportunity to consider the capabilities we need for the future to ensure trust and confidence in the markets we regulate and to deliver improved market outcomes for the Australian community. We thank the panel for its findings, observations and recommendations," said ASIC chairman Greg Medcraft, whose term has been extended for another 18 months.
The government also received support from the Australian Bankers' Association (ABA), with chief executive Steven Munchenberg saying a well-resourced regulator will keep the industry accountable.
"We support the introductions of a new industry funding model for ASIC. It's important that contributions are transparent and that the amount of fees levied matches the level of regulation and resources required for ASIC," he said.
"Aligning the new funding model with the expanded role of ASIC will also be important to ensure regulation is effective, efficient, and necessary."