The business regulator is looking to move to a user-pays system of regulation which would be likely to result in reduced fees for small businesses.
Daniel Wright, spokesperson for the Australian Securities and Investments Commission, told SmartCompany the International Monetary Fund has recommended to the government that the regulator’s core funding not only be secured, but be sufficient to meet future challenges.
“What we are doing is developing and discussing with government a new funding model for ASIC that will recover the full cost of ASIC’s regulatory resources from the sectors that benefit from that regulation,” he says.
“One of the ways to address this is to develop a user-pays funding model to recover costs from industry.”
Wright says ASIC’s regulatory costs would be recovered from those “stakeholders or sectors” where ASIC uses resources to achieve regulatory outcomes set by government.
The Australian Financial Review reports the proposal for ASIC to pay its own way would involve a levy on businesses of $350 million in fees each year.
ASIC chairman Greg Medcraft has been meeting with industry groups to promote the user-pays system.
Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany a user-pays system is likely to reduce the fees paid by small business.
“It would be a lot cheaper for small business, because we pay $210 a year on annual company returns and ASIC doesn’t do anything. Most of the work ASIC does is with big business and the banks, with small business they hardly do anything for us.”
Strong says that on a user-pays basis the fee paid by small businesses could drop to $50.
The user-pays system would open the way for a sale of ASIC’s business registration arm, which the Australian Financial Review reports could deliver as much as $6 billion in one-off revenue.
Strong has reservations about this sale particularly given the “nightmare” for businesses when ASIC moved from a state and territory-based system of registration to a national system.
When the move happened two years ago small business owners vented their frustrations at new requirements for transferring names and privacy concerns surrounding the requirement for a physical address which is displayed on the register.
“You would have to see how [privatisation] would work in terms of pricing,” Strong says.
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“If you privatise business name registration and the registration process is compulsory there is an opportunity to price gouge. As always, the devil is in the details.”