Yesterday, executives from the Australian Securities and Investments Commission appeared before the Senate Estimates Committee to outline the effect of Budget cuts and to update the Senate on the progress of compensation for clients of two of the Commonwealth Bank's financial planning businesses.In his opening address, ASIC chairman Greg Medcraft observed that the commission's budget would be cut by around A$120 million over four years, in addition to an increased efficiency dividend of $47 million over four years, and other savings measures.While this translates to a cut in the next financial year of around $44 million and a loss of 209 staff levels to 1,573, he said a voluntary redundancy campaign was already underway."With reduced funding, ASIC can still perform its statutory functions [and] … mitigate risks arising from lower levels of activity," Medcraft said.However, he said ASIC's proactive surveillance would "substantially reduce" across the sectors the commission regulates, "and in some cases stop". This would require ASIC to rely more on misconduct reports and complaints and to use a risk-based approach that focused on  "those entities or activities that have the greatest market impact."Examples of cost cutting measures included reduced "proactive surveillance" of debenture issuers and fewer document reviews of prospectuses, as well as reduced levels of service to customers by its registry business, Medcraft said. ASIC also took the opportunity to apologise for its mishandling of the Senate's inquiry into the conduct of Commonwealth Financial Planning, where ASIC provided inaccurate and incorrect evidence, including the amounts of compensation paid and the effectiveness of the process for compensating CFPL clients.Two measures that were not consistently applied were: •    upfront communication with all clients whose files would be subject to review, and •    the offer of up to $5,000 for those clients to get independent advice on any compensation offered. Medcraft confirmed that ASIC had imposed licence conditions on the Australian financial services licences of CFPL and Financial Wisdom. "These conditions, which are being finalised, will … provide over 4,000 customers with the opportunity to reopen the question of compensation and, in doing so, to have the benefit of $5,000 to obtain independent advice," he said.He concluded by promising to apply "long-term improvements to achieve good outcomes for financial consumers in the future".