The Government is undertaking a review of ASIC’s Industry Funding Model, including the temporary levy relief provided to financial advice licensees for 2020-21 and 2021-22.
Assistant Treasurer and Minister for Financial Services, Stephen Jones, says the government has issued a Terms of Reference to guide the review.
He says the ASIC IFM began in July 2017, following a recommendation of the Murray Financial System Inquiry to introduce a cost recovery model for ASIC. The IFM aims to recover the costs of ASIC’s regulatory activity from entities in the sectors that create the need for regulation.
“Given the ASIC IFM has now been in place for five years, it is appropriate to review it at this point and ensure the settings of the IFM remain appropriate in the longer term.”
Jones says the review “…will be forward looking and focused on identifying refinements to the IFM that may be required to ensure its settings remain appropriate.
“The review will also have regard to the temporary levies relief provided to personal financial advice licensees in respect of 2020-21 and 2021-22.”
A focus on sub-sectors that have faced significant increases in levies
The Terms of Reference says the Scope of the Review will include:
- Changes in levy amounts since the commencement of the IFM; “…with a focus on those sub-sectors that have faced significant increases in levies, volatility in levies between years, and variance between estimated and actual levies. This will include considering the impact of the cost burden on different types and sizes of regulated entities.”
- The types of costs and nature of ASIC’s activities that are recovered from industry, “…how those costs are recovered and who they are recovered from. This will include considering costs recovered through levies and regulatory fees-for-service, but will not include a detailed examination of individual fees-for-service. This will also include considering whether some or all costs for certain activities such as enforcement and capital expenditure remain appropriate to be recovered through the IFM.”
- How ASIC allocates costs to sub-sectors, “…with a focus on regulatory activity that impacts multiple sub-sectors, the consequences of time lags between regulatory action and cost allocation, and the changes to sub-sector composition, including due to firm exits.”
Jones says the review will be led by Treasury, in consultation with ASIC, the Department of Finance and the Department of the Prime Minister and Cabinet. Treasury will undertake a public consultation later in the year, “…which will provide an opportunity for stakeholders to provide input into the review.”
