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The mortgage broker associations have welcomed the news that ASIC levies will be lower than forecast this year due to lower enforcement activity.
After the Australian Securities and Investments Commission (ASIC) confirmed that its costs for regulating the broking industry in the last financial year (FY22) were 20 per cent less than forecast, the broking associations have welcomed the news.
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According to ASIC, it expects to recover $8.676 million from the 4,291 credit intermediaries it regulates — more than $2.2 million (20 per cent) less than forecast, and 20 per cent less than the levies from FY21.
The regulator said the lower amount came down to “enforcement costs being lower” than estimated and “lower investigation and court action costs for continuing enforcement matters” relevant to the broking industry.
Invoices for industry levies will be issued to entities between January and March 2023.
‘A good result to finish off on’: FBAA
Welcoming the lower levies, Peter White said it was “very pleasing to see that these costs have come down and the cost to industry is reflected in reduced pricing to brokers” (being $113.23 per credit representative).
“This is a very positive result for brokers around Australia as they meet and exceed their regulatory obligations and the best interests of their clients,” he said, reiterating that he hoped this meant that there would be no duplication of last year, where levies were “blown out at the last minute”.
“I feel the high level of interaction we’ve had on this subject (and others) will see that there is no reoccurrence of this,” Mr White told The Adviser.
He continued: “The vigilance of our regulator is extremely important for the long-term sustainability of our sector. Matters such as the recent 21 ACLs being cancelled due to not meeting their licence obligations is an important piece of work by ASIC ensuring that elements (that we, too, do not want in our industry) are removed,” he added.
“All in all, bar rising interest rates, it’s been a great year — especially for brokers across the country — and this is a good result to finish off on,” Mr White said.
‘A welcome Christmas present’
Naveen Ahluwalia, the head of policy and legal at the Mortgage and Finance Association of Australia (MFAA), commented that the MFAA was “pleased to see the actual regulatory costs for the credit intermediary sector are lower than ASIC’s forecasts in June this year”.
“This will translate into lower than forecasted fees for the industry, and a welcomed Christmas present.”
Ms Ahluwalia said the association had undertaken “significant work” with both ASIC and Treasury about the ASIC levy, through submissions, roundtables, and direct engagement, “particularly raising consistent concerns at the significant increase in the levy last year between actuals and estimates”.
“We are conscious of the impact of regulatory fees and levies on our members, most of whom are small business owners,” she said, adding that the new regulatory environment for brokers has resulted in a raising of professionalism in the industry and a drop in regulatory action.
“The implementation of the Best Interest Duty (BID) and other reforms over the last few years have seen trust and confidence in the industry at an all-time high, complaints consistently low and an industry that continues to thrive.
“Our advocacy on the ASIC levy is aimed to ensure that any regulatory costs levied on our members is directly proportionate to the low risk of consumer harm posed by our industry,” she said.
“The reduction in these costs is reflective of an industry that is living and breathing the Best Interest Duty, translating into lower enforcement activity by the regulator.”
The MFAA’s head of policy and legal said the association would “continue to engage with Treasury on the levy framework to ensure it is fit for purpose for the industry going forward”.
[Related: ASIC industry costs $2.2m less than forecast]
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