Is your business ready for ASIC's new funding model?

New rules will change the way industry pays for the costs of the regulatory body. ASIC Commissioner John Price explains.

New laws began on 1 July 2017, changing the way the Australian Securities and Investments Commission (ASIC) is funded. Under the new model — known as industry funding — those who create the need for, and benefit from, ASIC’s regulatory activities will bear the costs. These activities include stakeholder engagement, education, guidance, surveillance, enforcement and policy advice.

In January each year, ASIC will write to businesses to recover its actual costs for the previous financial year. The levies can only be calculated and issued in the following financial year. It is important for businesses to understand the new industry funding obligations and key dates in relation to the 2017–18 financial year.

Indicative levies

In March 2018, ASIC released forecast regulatory costs of $238 million for the 2017–18 financial year. ASIC regulatory costs are allocated to 48 sub-sectors — including corporates, auditors, insolvency practitioners, credit licensees, Australian Financial Services (AFS) licensees and other regulated entities and individuals. Some sub-sectors will pay a flat levy and others will pay a graduated levy. For example, based on ASIC forecasts, the indicative levy that businesses may be required to pay include:

• Listed public companies: minimum levy of $4000, plus an estimated graduated levy of $0.19 per $10,000 of market capitalisation above $5m
• Unlisted public companies: flat levy of $321
• Large proprietary companies: flat levy of $868.

For further details on the indicative levies for other sub-sectors refer to ASIC’s Report 570: Indicative Levies for ASIC industry funding 2017–18 here. In the first year of industry funding, ASIC is unable to publish indicative levies for some sub-sectors.

In November 2018, ASIC will publish the actual regulatory costs for the 2017–18 financial year. The information will be made available on asic.gov.au and via a legislative instrument. Differences between the indicative levies published in March and the actual regulatory costs published in November may be driven by population changes, forecast versus actual costs and data submitted by businesses to ASIC.

New obligations/key dates

Each year, regulated entities will receive an invoice for ASIC’s regulatory services delivered in the prior year. Key dates for 2017–18 are:

• In July 2018, ASIC wrote to businesses to provide detailed information about their industry funding obligations. Unique login details were supplied to provide businesses with access to ASIC’s Regulatory Portal.
• Between July and September 2018, businesses are asked to log in to ASIC’s Regulatory Portal to supply accurate information (or “metrics”). The information will help calculate levies for the 2017–18 financial year. Metrics include revenue generated, adjusted total assets, total deposits or market capitalisation. In some instances, pre-filled information will be input by ASIC and businesses will log in to validate it.
• Businesses have until 27 September 2018 to submit/validate information via ASIC’s Regulatory Portal. For those required to pay a flat levy only, the information provided will confirm which sub-sector you have been operating in. For those required to pay a graduated levy, it will confirm your entity’s share of the leviable activities in your sub-sector and determine your final invoice amount. Failure to submit and/or validate information, or submitting inaccurate information, may lead to penalties.
• In January 2019, the first invoices covering the 2017–18 financial year will be issued via ASIC’s Regulatory Portal. For small proprietary companies, regulatory costs will be collected through a $4 increase to their annual review fee. Fee changes take effect from 1 July 2018. The fee increase minimises the reporting burden on small proprietary companies who, unless operating in an industry funding sub-sector, are not required to provide further information.

Fee-for-service price changes

ASIC charges fees-for-service for licensing and professional registrations, applications for relief, and reviews of corporate finance transaction documents. A fee-for-service Cost Recovery Implementation Statement (CRIS) was released for consultation on asic.gov.au/industry-funding in May 2018, outlining new charges for services which, subject to legislation passing, take effect from 1 July 2018.