Brokers face $1.3m rise in ASIC levies

The latest statement has followed draft estimates that were issued in July and industry feedback, with the estimated charges remaining largely unchanged.

ASIC still expects to recover a total of $265.4 million in costs across the industries it polices, to contribute to a total levies of $337.5 million (including statutory levies).

However, the estimates remain unconfirmed, until ASIC finalises the levies in December and issues invoices in January.

The deposit taking and credit segment is still projected to cough up $39 million in cost recovery levies – to contribute to total levies of $44.5 million.

In particular, the regulator has an estimated cost recovery total of $8.1 million for credit intermediaries, across 4,653 firms with 36,248 credit representatives.

There is an indicative levy for intermediaries of $1,000 minimum levy for each firm, plus $96.55 per credit representative.

In contrast, ASIC had recovered $6.8 million from the sector for the previous year, with firms being charged the minimum levy of $1,000 plus $61.76 per credit representative.

However, the actual recovered amount had dropped by $3.2 million from ASIC’s initial estimate of $10.1 million.

As ASIC explained in its latest statement, enforcement for the sector ended up costing $1 million less than expected, while actual costs for supervision and surveillance were $826,000 lower than the estimate.

“Some enforcement matters had lower than expected costs – including costs relating to staffing and external service providers – which contributed to this difference,” the report said.

“There was also a decrease in the regulatory costs allocated to this subsector as a result of reallocation of costs to other ASIC teams.”

ASIC also noted industry feedback from its draft recovery statement, on the variances between actual and estimated costs in previous years.

One stakeholder suggested the regulator should explain variances between estimated and actual costs, if the gap exceeds 10 per cent.

ASIC responded: “We cannot predict all changes in our operating and regulatory environment. It is important that we maintain flexibility in our resourcing to adapt to new developments and respond to misconduct as it arises.

“This is likely to result in some variance between our budgeted costs and our actual costs over the year.”

In July, Finance Brokers Association of Australia (FBAA) managing director Peter told The Adviser the $34.76 yearly raise per representative for the intermediary levy was a “fairly insignificant” change, but the rise was reflective of enforcement against the broking industry.

Around $1.2 million is expected to cover supervision and surveillance from credit intermediaries’ levies, while $1.9 million has been delegated to enforcement.

The year before, supervision and surveillance had cost $1.1 million, while enforcement ran up a total of $1.5 million.

Other regulatory activities, such as industry engagement are tipped to see $191,000, while $43,000 has been assigned to education, $85,000 to guidance and $184,000 to policy advice.

Meanwhile, credit providers face an estimated cost recovery of $29.5 million, with lenders looking to pay a minimum levy of $2,000 plus 54¢ per $10,000 of credit provided to customers above $100 million.

Smaller and medium amount lenders on the other hand are expected to pay $16,61 per $10,000 of credit provided under small and medium credit contracts.

Deposit product providers are projected to cough up $4.4 million, across 211 banks, with a minimum levy of $2,000, and if the entity’s deposits exceed $10 million, a further charge of $1.71 per $1 million above the $10 million threshold.

Looking at industry feedback, many concerns seemed to centre around the levies for financial advisers, superannuation trustees and liquidators.

One respondent had told ASIC the raise in levies had surpassed the rate of revenue growth for most financial planning businesses.

But multiple submissions had requested that ASIC provide more details in its statement on its costs and performance, as well as a detailed breakdown of activities to explain how regulatory costs are preferred.

[Related: ASIC outlines ramifications of AFCA expulsion]