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Compliance

ASIC defends higher industry levies

by Reporter11 minute read
ASIC defends higher industry levies

The financial services regulator has responded to concerns that it has substantially upped its levies, outlining that it needs the extra funds to cover its post-royal commission enforcement activities.

Last week, the Australian Securities & Investments Commission (ASIC) released a summary of its actual regulatory costs and actual levies for the year 2019-20.

ASIC confirmed its regulatory costs to be recovered through industry funding levies for the 2019-20 year were $320.331 million, slightly below its original estimation of $324.5 million (but markedly up from $273 million in 2018-19).

Of this, the 4,653 credit intermediaries (such as brokerages and aggregation groups) will be charged a total of $6.892 million.

This comprises a minimum levy of $1,000 plus $61.76 per credit representative and is markedly down on the regulator’s previous estimates of the indicative levy being $1,000 plus $138.68 per credit representative.

As such, the total levy for regulating credit intermediaries in 2019-20 is far below the estimated $10.1 million outlined last year.

Levy invoices are due to be issued “shortly”, ASIC said, but added that it was “acutely aware of the challenges facing many businesses due to COVID-19 and is committed to working with regulated entities facing difficulties paying industry funding levies”.

“ASIC will consider waivers due to the impact of COVID-19 on a case-by-case basis.”

The regulator also updated its final 2019-20 Cost Recovery Implementation Statement (CRIS) this month to include some of the feedback that arose during consultation on the draft document published in June 2020.

In the updated CRIS, the regulator noted that some of the main issues raised by the respondents included concerns around the design of the industry funding model, inconsistency in certain fee amounts, the increase in levies and the allocation of budgeted costs to different activities, and the visibility of cost allocations for sectors and subsectors.

These issues were largely raised by players in the accountancy, financial planning and superannuation industries.

ASIC has defended the levies, commenting its regulatory work “continues to align with the recommendations of the royal commission, which has resulted in increased enforcement, supervision and surveillance costs”.

It said: “Our strategic planning framework includes a threat, harm and behaviour framework to identify, describe and prioritise actual and potential harms that need to be addressed. This framework supports how we plan our regulatory action and allocate our regulatory costs across different subsectors and different regulatory tools...

“We are committed to engagement and guidance, and acknowledge that they may help to reduce enforcement and surveillance in the long term,” ASIC noted.

“However, as a conduct regulator, ASIC continues to focus on engagement and surveillance activities, consistent with the recommendations of the royal commission. These activities involve higher costs than education and guidance.”

The regulator also outlined that while some had suggested that the ex post nature of the levies (i.e. levies are calculated after the business activity has occurred and regulatory costs have been finalised) continues to “create uncertainty and results in an inability to budget for the levies”, it stated that the government had undertaken “extensive consultation to develop and refine the industry funding model” and that any amendments to the model were “a matter for government policy and will require legislative change”.

[Related: ASIC levy to cost broking industry over $10m]


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Comments (10)

  • Mortgage Brokers account for less than 1% of all complaints to AFCA.

    'regulatory costs to be recovered through industry funding levies for the 2019-20 year were $320.331 million'
    '4,653 credit intermediaries (such as brokerages and aggregation groups) will be charged a total of $6.892 million.'

    $320,331,000 × 1% = $3,203,310 ÷ 4653 = $688.44 - Why am I being charged $1,000 as a sole operator?

    As per normal, ASIC just make stuff up and then acts perpetulantly whenever questions, perfect example is the Westpac Wagyu & Shiraz high court case.

    As a Mortgage Broker of 15 years in the industry, who has never received a complaint, then surely I should at the least be afforded some 'discount'?
    1
    • Same here, over 15 years as a broker and not one compliant. ASIC fee is just a "Fee for No Service"
      0
  • I need to levy a fee to ASIC to cover my post royal commission into brokers costs created by ASIC
    1
  • Okay, lets have ASIC justify its cost by setting our what those costs actually are so that we can scrutinise these costs. IF we cannot scrutinice these costs how can we be expected to pay for an ever increasing salary level - as thats what we are paying for. We need to be able to have ASIC prepare and transaparently disclose its budgeted costs and the detailed breakdown. That is what they do to our fees, so we should be able to do that to their fees. I do not wan t to be paying for entertainment, parties increased salaries when my income is decreasing, etc. It is only fair.
    1
  • Massive collusion here by lenders and ASIC to cull mortgage brokers and financial planners all the while when MFAA & FBAA are arranging their golf days.
    1
  • Try being a financial planner, our levy will be about $2,500 per adviser! What a rort!
    4
  • The minimum charge is ridiculously expensive for small broking practices, especially when we hear in the news the behaviour of senior executives of ASIC.
    0
  • If the levies are to cover costs, and they say that is fair and necessary, then ASIC will have NO problems with Brokers introducing Levies to cover their increasing costs like Claw back costs or similar! IT is all relevant! The Broker is copping fees left , right and Centre !
    1
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