“We have long advocated a review of the Industry Funding Model (IFM) that clearly is not fit for purpose – a point highlighted in the report,” Burgess said.

“The underlying principle of the IFM where well-behaved firms foot the bill to regulate poorly behaved firms is fundamentally flawed and unsustainable.”

Burgess said the report highlighted the IFM contributed a “significant proportion” of ASIC’s budget, estimated to be about 83 per cent or $422 million of its appropriation for 2021–22, via levies on 52 industry sub-sectors.

“The levy has seen sustained increases over its history. The first levy in 2017-18 was $934 per adviser compared with the 2022-23 levy of $2818 which was reduced from the original estimate of $3217 after strong industry pushback,” he said.

He added that advisers are nervously waiting for the 2024 levy rate, which is yet to be determined stating that the sector will for the first time incur a levy to fund the recently commenced Compensation Scheme of Last Resort (CSLR), resulting in a further $1,186 in costs being charged to each adviser.

“The report adds that the IFM has been ‘negatively received by participants to this inquiry, characterising the funding model as unfair, poorly administered, and counterproductive’ and the SMSFA Association can only concur,” he said.

He said the third recommendation in the report urges the “shortcomings” in Australia’s system for handling reports of alleged corporate misconduct to be addressed should also be implemented.

“We note that ASIC’s failure to act in a timely manner was a significant factor in the Dixon Advisory case cited in the report,” he said.

“As it says, ‘ASIC’s enforcement actions in response to the now-defunct Dixon Advisory are illustrative of its enforcement woes. It took ASIC two years to settle its case against Dixon, and the company was penalised $7.2 million – a fine unlikely to ever be paid’.”

According to Burgess, this point highlights why it’s critically important for the corporate regulator to move swiftly to investigate reports of misconduct so that consumers are protected.

“As part of recommendation three, the report also wants the regulator to develop consistent standards to transparently report information to the public about alleged misconduct, as well as timely responses to people who submit reports of alleged misconduct,” he said.

“Both these recommendations deserve to be implemented. What we have learnt from the Dixon Advisory fiasco is that because of the regulator’s tardy response to consumer complaints, the advice industry could now be left to foot much of the bill for all the unpaid Dixon compensation claims that could total many millions of dollars.”