Credit intermediaries will have to pay 37 per cent more in ASIC levies than originally estimated to cover extra enforcement costs from the financial year 2025.
The Australian Securities & Investments Commission (ASIC) has begun issuing invoices for its supervisory work in the financial year ending June 2025, with charges coming in much higher than originally expected.
Credit intermediaries (those that hold a credit licence authorising them to engage in credit activities other than as a credit provider) will be charged significantly more than originally estimated for regulatory supervision, according to ASIC’s final industry funding costs for FY25.
In July, ASIC has estimated that credit intermediaries would be paying $6.05 million in regulatory costs – a 109 per cent increase on FY24 figures.
However, the final costs are now in and show that the industry will actually be paying substantially more.
The broking industry will pay a total of $8.28 million in levies to cover the cost of the financial services regulator’s work – a sharp 36.9 per cent increase over the $6.05 million originally estimated and nearly three times higher than the $2.89 million recovered in FY24.
Why the spike?
According to the regulator, the majority of the increase was driven by a material variance in enforcement costs, which were 40.1 per cent higher than estimated due to increased enforcement action (at $2.3 million) and “new matters arising” in the sector.
This may suggest that more regulatory action may be coming down the pipe from ASIC, given that there has been limited broker enforcement taken this year.
Indeed, ASIC’s FY25 regulatory actions, which cover credit intermediaries, included a sector-wide review of motor vehicle finance, where the regulator scrutinised the “entire customer journey” and issued tailored action letters to address high establishment fees and predatory sales tactics.
The regulator also focused on predatory lending, specifically taking action against “fringe” entities and those using business models designed to avoid standard consumer credit protections. This included examining compliance with new small amount credit contract (SACC) requirements and targeting firms that shifted consumers into higher-risk products.
Additionally, ASIC intensified its oversight of debt management firms, pursuing enforcement against those making misleading claims about debt reduction or charging high fees for limited services.
Other key drivers for the higher-than-expected bill included:
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Supervision and surveillance: 32.1 per cent higher than estimated ($1.42 million actual versus $1.08 million estimate).
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Industry engagement: 43.1 per cent higher than estimated.
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Digital, data, and technology: 39.3 per cent higher than estimated ($1.08 million actual versus $0.78 million estimate).
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Property and accommodation services: 42.0 per cent higher than estimated.
Invoices are now being issued to the 4,097 credit intermediary entities ASIC regulates (with invoices expected to all be received by March 2026).
Based on the final figures, these entities will be subject to a minimum levy of $1,000 plus $89 per credit representative.
Speaking to The Adviser about the updated levies for FY25, Greg Ashe, director of risk management company QED Group, said: “Bearing in mind that the total spend in the sector in the previous year was $2.892 milion, what did we get for our extra $5.391 million or 286 per cent increase in regulatory spend? We haven’t seen an almost tripling in regulatory activity driving the bad apples out of the industry. We haven’t seen any inquiries into CL50 returns like we did a few years ago... What has ASIC done with our extra money?
“I’m sure the regulator is up to plenty behind the scenes but, from a visible perspective, it’s the lenders, via the aggregators that seem to be conducting most of the regulatory work. That doesn’t work too well either because all the lenders are concerned about is the bit that affects them – the credit risk part. No one appears to be actively educating or encouraging licensed brokers to execute their other obligations.
“On the positive side, I can report that credit licence applications are faster than they were a year or two ago, so ASIC has shifted something there.”
How does broking stack up?
Aside from credit intermediaries, there was only one other subsector that had higher costs than estimated: auditors of disclosing entities. This subsector’s bill increased by 40 per cent to $9.83 million as a result of increased surveillance and enforcement action.
However, all other subsectors fared better.
When looking at the entire deposit-taking and credit sector (including payment product providers and deposit product providers), the total cost being recovered by ASIC is $53.73 million for FY25. This is 6 per cent less than estimated.
The bill for credit providers (lenders) came in at $30.35 million, which was actually lower than the $34.35 million initially forecast in the draft estimates last year.
Similarly, small and medium-sized credit providers saw their actual costs drop to $3.58 million – down from an estimate of $4.94 million.
As is historically the case, the corporate sector remains responsible for the largest portion of ASIC’s bill, totalling $87.27 million. This is followed by:
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Market infrastructure and intermediaries: $67.37 million.
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Investment management and superannuation: $65.01 million.
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Financial advice: $46.55 million.
Overall, the total regulatory costs to be recovered through levies for FY25 is $337.56 million – $11.7 million less than the estimated $349.3 million forecast in July last year.
[Related: ASIC levies double for broking industry, prompting calls for a rethink]
