The Insurance Council of Australia (ICA) says it understands why the Federal Government is evaluating an industry-funding model for the Australian Securities and Investments Commission’s (ASIC) regulatory activities.

But it has questioned whether it is appropriate for the Government to part with funding responsibility for what is a public benefit.

ICA “notes” the argument that an industry-funding model would provide more certainty for ASIC and enhance the transparency of the regulator’s costs and operations.

However, ICA spokesman Campbell Fuller told insuranceNEWS.com.au that should not be the only consideration.

“ICA believes an argument can equally strongly be made that the regulation of the financial services sector is a government function that provides a significant public benefit for the community as a whole, as opposed to simply producing benefit for those entities operating within the sector,” Mr Fuller said. “As such, it is more appropriate that regulation be funded from the public purse.”

The National Insurance Brokers Association (NIBA) also has concerns about the proposed funding model.

NIBA’s is not a philosophical objection. Its concern is that the Government’s consultation paper does not make clear how the funding mechanisms would affect broking companies, many of which are small businesses.

CEO Dallas Booth told insuranceNEWS.com.au NIBA has met with Treasury officials to outline its position.

“We need clarity about how the funding model would work,” he said.

Submissions in response to the consultation paper close on Friday.