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ASIC to recover $5.6m from credit intermediaries
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ASIC to recover $5.6m from credit intermediaries

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Annie Kane 3 minute read

Credit intermediaries — such as brokers an aggregators — will need to cover more than $5 million of ASIC’s costs to regulate the industry.

As part of the Australian Securities & Investments Commission’s (ASIC) cost recovery implementation statement (CRIS), those that “create the need for and benefit from ASIC’s regulation will bear the costs”.

This funding will help cover ASIC’s costs of supervision and surveillance, enforcement, industry engagement, education, guidance, policy advice and financial capability work.

In newly published estimated industry sector levies for 2018-19, the financial services regulator outlines that it expects to recover a total of $273 million of its total budgeted resources of $406.4 million via industry funding levies.

However, the final levies will be based on the actual cost of regulating each subsector in 2018–19.

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ASIC will issue invoices under the industry funding model for the 2019-19 financial year in January 2020, after the business activity has occurred and it has finalised its regulatory costs.

What the credit sector will pay

When it comes to credit businesses, which includes brokers and banks, ASIC suggests it will need to recoup $29.65 million in cost recovery levies next year.

Of this, $22.74 million will be recovered from 1,155 credit providers (those that hold an Australian credit licence), $1.26 million from small and medium amount credit providers and $5.65 million will come from credit intermediaries (such as mortgage and finance brokers).

All credit providers will pay a minimum levy of $2,000.

Those that provide more than $100 million in credit contracts will also pay a variable component based on the credit provider’s share of the total value of credit contracts above the $100 million threshold provided by the subsctor each financial year.

ASIC noted that if a credit licensee holds authorisations as a credit provider and a credit intermediary and provides both small amount credit contracts and regular loans, they are required to pay the levy applicable for all three subsectors.

However, each graduated levy will be calculated separately and only relates to the licensee’s involvement in that activity or subsector.

Meanwhile the 5,124 credit intermediaries - which include 37,479 credit representatives - will pay a minimum levy of $1,000 and then a variable amount depending on the number of credit representatives the entity has (as a proportion of the total number of credit representatives in the subsector).

The indicative levy suggests it will be around $14.33 per credit representative.

It is estimated that around a fifth of the budgeted costs to regulate credit representatives will be for enforcement.

The industry can provide feedback on the CRIS until 26 April, which ASIC said it will consider before preparing the final CRIS in May 2019.

[Related: ASIC to recover $9m from credit intermediaries]

ASIC to recover $5.6m from credit intermediaries
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Annie Kane

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Email Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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