Government welcomes feedback on ASIC funding model

The government has released a discussion paper after commencing the review of the ASIC industry funding model (IFM) in August.

Stakeholder feedback received through this process is set to inform the review’s consideration, including to consider whether any refinements are required to the IFM to ensure its settings remain appropriate.

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The IFM was introduced in 2017, prior to which the corporate regulator was mainly funded by taxpayers.

The IFM comprises industry levies charged annually to entities across 52 industry sub-sectors, and fees-for-service charged to individual entities at the point of initiating certain regulatory services.

As part of the review, the government is welcoming feedback on the changes in levy amounts since the commencement of the IFM, among other things.

The government has found that since the commencement of the IFM, the amount recovered through levies has increased by $77.5 million or 33 per cent (as at 2020–21).

In particular, the government is seeking feedback from advisers on the possible creation of two sub-sectors (rather than the existing four) in the financial advice sector — with one sub-sector for licensees that provide personal advice to retail clients on relevant financial products and one sub-sector for licensees that do not provide personal advice.

Another method proposed by the review is the allocation of costs at a sector level (rather than sub-sector level) and the apportion of costs amongst entities using a generalised metric such as a volume-based proxy.

The government is also opening the floor up for debate by asking stakeholders whether there are other opportunities to simplify the design, structure and legislative framework for levies.

Moreover, questions relating to volatility in levies between different years include: “Is it more important to have less volatile/more stable levy amounts year-on-year, or more granular and equitable apportionment of costs each year?”; and “Are there other ways to manage or reduce volatility in levy amounts year-on-year, including other approaches to spreading costs? If so, why, and what benefits would it provide?”.

The current model was the subject of significant criticism from advice and accounting industry associations after the corporate regulator last year announced that levy costs for the 2020 financial year were set to rise by more than 60 per cent on earlier estimates.

Former treasurer Josh Frydenberg later announced “temporary and targeted relief” after ASIC’s 2020–21 Cost Recovery Implementation Statement estimated a per adviser levy of $3,138.

The government is welcoming feedback until 28 October 2022.