The ASIC Supervisory Cost Recovery Levy Bill 2017 and the ASIC Supervisory Cost Recovery (Collection) Act 2017 came into effect 1 July 2017 and essentially changed the method in which ASIC will be funded. The legislative changes will allow ASIC to better focus its resources on the sectors that require the most attention and regulation. This further incentivises industries to self-regulate so that where a sector has instances of misconduct, ASIC will intervene and increase the costs charged to that sector.
Going forward, regulated entities will receive an invoice for ASIC’s regulatory services delivered in the previous financial year. Regulated entities are now grouped into 6 sectors and 48 subsectors across all corporates (subject to the Corporations Act (Cth) 2001 (Corporations Act), auditors, insolvency, practitioners, credit licensees, Australian Financial Service licensees and other regulated entities and individuals. There will be an allocation of ASIC’s regulatory costs among these subsectors either as a flat levy (where the cost of regulating a particular subsector is to be borne equally among the entities within that subsector) or a graduated levy (where the cost is to be paid by an entity dependant on its size or the level of its business activity.)
The new industry funding model is designed to recover the actual amount spent during the previous financial year and therefore levies will only be calculated and issued in the following financial year. Essentially, the cost of ASIC’s work in each subsector will be forecast in its annual Cost Recovery Implementation Statement (CRIS) which will be published each year providing an indication as to the expected expenditure on its regulatory activities. The CRIS is an essential component of ASIC’s accountability to Government and industry in relation to the transparency of ASIC’s costs. The CRIS will only provide indicative figures and where possible, ASIC will publish the indicative levies in advance for each subsector. Recently, ASIC provided a summary of its indicative levies for the FY2017-2018 period – see here.
While around 90% of ASIC’s regulatory activities will be recovered through the industry funding model, the remaining 10% will be recovered through fees for service i.e. those regulatory costs attributable to a single entity. Fees for service will apply to licensing and professional registration services, processing of relief applications and ASIC’s formal compliance review of documents lodged by entities under the Corporations Act.
As of 1 July 2018, all proprietary companies will face an annual review increase by approximately $4 and as of 4 July 2018, the new fee-for-service charges have commenced. During the period from July to September 2018, regulated entities will have to submit a return about their operations for the FY2017-2018 period. By October 2018, the Budget FY2018-2019 leviable costs by subsector will be published in CRIS. In January 2019, ASIC will issue its first levy invoices to industry for the previous financial year.
For an outline of the 2017-2018 cost recovery arrangements for the sectors affected, see the Appendix in Report 535 ASIC cost recovery arrangements: 2017-2018 here.
For further information on what your organisation needs to do and pay, levy types and key dates, see the link for ASIC’s industry funding here.
Thank you to Bill Fuggle and Sibel Kaan at Baker McKenzie
for providing this update.