Banks say they won’t pass on “user-pay” regulation levy to customers
(21 April 2016 – Australia) Under the proposed “user-pays” model for regulation from the Australian Securities and Investments Commission (ASIC), large financial institutions and businesses will be expected to pay for more than 80 percent of the regulator's A$350 million budget.
A recent ASIC analysis has found that under proposed rules, large banks will be required to pay around A$4 million in levies, big investment banks A$768,000, compared to A$538,000 a large listed company is likely to pay.
However, the government said on Wednesday it would hold a further consultation over the proposals.
Following a meeting with leaders in the banking industry, Prime Minister Malcolm Turnbull and Treasurer have said the banks confirmed their "strong support" for the changes to ASIC outlined earlier this week.
Further, banks have ruled out passing the increased cost of the levy on to customers.
"They have confirmed they will not be passing on costs," Turnbull said.
"They will have to bear to support the extra investment in ASIC, they won't pass them on to the public."
ANZ joined the Commonwealth Bank, National Australia Bank (NAB) and Westpac in ruling out passing on the cost.
A Westpac spokesperson has indicated that the bank would "certainly" would not lift interest rates in response to the Government's announcement the levy banks already pay to the corporate regulator will rise by A$121 million.
"We certainly have no plans to increase rates based on [the] announcement," a Westpac spokesman said.
Banks and financial institutions will also be responsible for fully funding their own regulatory body in coming years.
But the Federal Opposition, which continues to press for a royal commission into the financial sector, has described the new cash as "hush money" paid by the banks to stave off wider scrutiny.
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