Australian govt consults on new ASIC fees

The Australian government is consulting on the next stage of the changes to the funding model of the Australian Securities and Investments Commission (ASIC).

At present, the fees charged for the services and activities ASIC provides do not truly reflect the actual costs incurred by the regulator. Thus far, these services and activities have only attracted a nominal fee. As a result, any difference between the fee an entity pays and the actual costs incurred by ASIC is subsidised by taxpayers.

The aim of the changes is to recognize that ASIC’s regulatory services primarily benefit the requesting entities, and as such the fees associated with the regulatory services will be cost recovered. The regulatory activities ASIC provides will no longer be taxpayer funded.

The industry funding model’s introduction is expected to have significant benefits, including: improving equity, as only those entities that are regulated by ASIC and create the need for regulation will bear its costs, rather than ordinary taxpayers; encouraging regulatory compliance as good conduct will reduce supervisory levies; as well as improving ASIC’s resource allocation, by providing ASIC with richer data to better identify emerging risks’ and enhancing ASIC transparency and accountability.

On July 1, 2017, the first phase of the ASIC industry funding model commenced with the introduction of industry levies to recover the costs of ASIC’s regulatory activities. Now, the Government seeks to implement the second phase – that is, that ASIC’s costs for specific regulatory activities requested by an entity should be fully recovered from that entity.

A number of sectors and entities will be affected, including Australian Financial Services (AFS) licencees. The change will apply to fees for:

• Document compliance reviews (such as prospectuses, compliance documents);
• Licence applications or variations;
• Applications for registration;
• Applications for relief.

The fees prescribed in the Regulations will closely reflect the actual costs ASIC incurs when providing regulatory services. The Fees Act specifies that the Regulations may prescribe a fee for a chargeable matter by specifying an amount; however the specified amount may not exceed a certain limit:

• The $10,000 cap will increase to $200,000;
• the $50,000 cap will increase to $300,000; and
• the $100,000 caps will increase to $300,000.

Also, ASIC will be able to apply tiered fees based on the complexity of the matter and having regard to any other matter in relation to the entity by whom a fee is payable to enable imposition of different fees depending on the applicant.

In preparation for the fees-for-service regime which is set to enter into force on July 1, 2018, the Australian Government seeks stakeholder feedback on the exposure draft legislation and its explanatory materials.

Whereas the exposure draft legislation includes proposed fee amounts, the actual fee amounts will only be finalised once ASIC has undertaken public consultation on its fees-for-service Cost Recovery Implementation Statement.