General insurance representatives fear the industry will end up paying for the mistakes of banks as the Australian Securities and Investments Commission (ASIC) moves to an industry funding model.

Treasurer Scott Morrison last week announced a $127 million ASIC reform package, primarily financed by the nation’s banks.

A $121 million bill “for beefing up our cop on the beat” has been sent to the banks, and they have given assurances it will not be passed on to customers.

Mr Morrison says the reforms will give ASIC stronger powers and funding “to enhance surveillance capabilities, better enabling our corporate watchdog to combat misconduct in Australia’s financial services industry”.

But the regulator will then shift to a “full industry funding”, or user-pays, model by the second half of next year.

“From 2017/18, ASIC’s costs will be recovered from all industry sectors regulated by ASIC.”

The Insurance Council of Australia and the National Insurance Brokers Association (NIBA) say the general insurance industry could end up paying for the mistakes of other sectors.

“Those who are generating greater levels of regulatory activity should be contributing more,” NIBA CEO Dallas Booth told insuranceNEWS.com.au.

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