Changes to ASIC funding

In response to the recommendations of the Financial System Inquiry, the Australian Federal Government began consulting with affected industries on the introduction and operation of an industry funding model for ASIC regulated entities in April 2016. The regime commenced on 1 July 2017.

The Government has now introduced new laws that change the way ASIC is funded. ASIC’s regulatory costs will be allocated across 48 industry subsectors based on the actual costs of ASIC’s regulation of each subsector in the previous financial year. This is known as the ASIC Industry Funding Model. New fees for service commenced in July 2018.

Industry Funding Model

Under the Industry Funding Model, entities regulated by ASIC have been categorised into 48 subsectors across all corporate entities subject to the Corporations Act. These subsectors include, among others, auditors, insolvency practitioners, credit licensees, Australian Financial Service licensees and other regulated entities and individuals.

The industry funding model will recover the actual amount spent during the previous financial year. Therefore the levies can only be calculated and issued in the following financial year. Some entities will pay a flat levy, with the cost of regulating a subsector shared equally among the entities operating in that subsector. Other entities will pay a graduated levy, with the entity’s size or level of business activity determining their share of costs.

The detailed methodology for how ASIC calculates levies for each industry sector is outlined in ASIC Report 535 ASIC cost recovery arrangements: 2017–18. January each year, regulated entities will receive an invoice via the ASIC Regulatory Portal. The first invoices will be issued in January 2019.

The cost of ASIC’s work in each subsector is forecast in ASIC’s annual Cost Recovery Implementation Statement (CRIS).  The CRIS is a document that ASIC will publish each year which will set out the expected expenditure on its regulatory activities.

Registration of entities in the ASIC Regulatory Portal

In July 2018, ASIC requested its regulated entities to provide industry funding contact details and submit their business activity metrics in the new ‘ASIC Regulatory Portal’, by 27 September 2018.

If your organisation received a letter from ASIC but is yet to provide the information requested, you should act immediately to avoid penalty. We can assist you in meeting your regulatory compliance requirements under the Industry Funding Model.

Please contact us to discuss your obligations or the new model more generally.