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The regulator is calling for feedback for its industry levies, which it estimates will be slightly down on last year’s costs.
The Australian Securities & Investments Commission (ASIC) has published its draft cost recovery implementation statement (CRIS) for 2021-22.
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The levies, which are based on ASIC’s planned regulatory work and associated costs for the 2021-22 financial year, will be finalised in December and invoiced between January and March 2023.
Overall, ASIC estimates it will recover $332.3 million of its 2021-22 regulatory costs via industry funding levies.
It expects to recover $10.897 million from the 4,413 credit intermediary entities (as per the meaning of the National Credit Act) it regulates. This marks a decrease of about 3.6 per cent on last year’s levies, when it recovered $11.36 million.
Costs will be $1,000 plus $171.97 per credit representative for FY22.
According to the regulator, the costs this year will help cover the work it has been undertaking across the deposit-taking and credit sector this financial year.
For credit intermediaries, these largely relate to regulation coming about from the royal commission, including:
- Mortgage broker best interests duty and conflicted remuneration rules
- Design and distribution obligations
- Poor debt collection practices and monitoring of debt management firms
It also covers ASIC’s work in supporting law reform, stakeholder engagement and institutional supervision of the credit and debt sectors.
Feedback on the draft CRIS can be submitted until 28 June 2022, with final estimates expected to be published by August.
Estimates vs reality
While ASIC’s estimates aim to help regulated entities budget for the upcoming costs, the regulator was met with ire earlier this year when the final costs for its regulatory program for the last financial year ended up much higher than anticipated.
For FY20-21, the regulator indicated intermediaries would be charged around $96.55 per credit representative – however, the final charges ended up being $184.31 per credit representative.
This figure was nearly three times higher than the levy from the previous financial year, when credit intermediaries were charged $61.76 per rep.
As such, while ASIC had estimated it would recoup $8.15 million from credit intermediaries last year, it ended up collecting $11.36 million.
Speaking in February of this year, the chief executive of the Mortgage and Finance Association of Australia (MFAA), Mike Felton, expressed concerns at the divergence between the past cost, estimates and final levy.
“ASIC has informed us that the variance has resulted from greater than expected costs being incurred in the 2020/2021 year ($11.36m versus the $8.15m estimated), however we are yet to establish why the additional costs were not included in the November estimate and how actual expenditure has risen a notable 65 per cent from the $6.9m incurred in 2019/2020,” Mr Felton told The Adviser at the time.
Peter White, managing director of the Finance Brokers Association of Australia (FBAA) called the fee hike a “bitter pill” to swallow for some aggregators.
“Obviously, everyone in the industry is going, ‘what the hell happened there?’” he told The Adviser.
“We understand that an estimate’s an estimate, but usually it’s not far off the money.”
According to ASIC’s latest CRIS estimates, the main driver for the 39 per cent difference in estimates vs actual costs last year was down to “higher than estimated” enforcement costs “due to an increased volume of enforcement action relevant to this subsector”.
Indeed, enforcement of credit intermediaries cost ASIC $4.02 million, according to the latest CRIS, nearly double its estimated $2.31 million.
“As a result of the variance in direct costs, the various indirect costs allocated to the subsector were also higher than our estimated costs,” it said.
[Related: ‘What the hell happened?’: ASIC charge per broker triples]
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