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ASIC has released the indicative levy amounts for the 2018-19 financial year. The draft Cost Recovery Implementation Statement (CRIS) details ASIC’s costs and how these costs are allocated to participants in the financial services and credit industries.  We encourage all AFSL and ACL holders to:

  1. review the CRIS for their estimated levy; and
  2. update their cashflow projections and budgets in anticipation of the invoice from ASIC in January 2020.

How much are you likely to Pay?

AUSTRALIAN FINANCIAL SERVICES LICENCES (AFSLs)
Corporate SubsectorsBudgeted cost recovery amount
($ in Millions)
Number of EntitiesIndicative minimum levy/flat levy ($)Levy Metric Description
Retail OTC Derivatives Issuers5.36610552,826Number of days AFS licensee was authorised to provide financial service in the leviable financial year
Payment Product Providers1.2586522,000Revenue from payment product provider activity
Risk Management Product Providers0.152582,767Number of days AFS licensee was authorised to provide financial service in the leviable financial year
Margin Lender0.158227,348Number of days AFS licensee was authorised to provide financial service in the leviable financial year
Securities Dealer1.5948861,000 (plus $7.87 per $1 million of annual transaction turnover)Annual transaction turnover value
Responsible Entities29.6214717,000 (plus $2.20 per $1 million of adjusted total assets above the $10 million threshold)Adjusted total assets and Number of days AFS licensee was authorised to provide financial service in the leviable financial year
Wholesale Trustees10.8281,6261,000 (plus $18.18 per $1 million of adjusted total assets)Adjusted total assets and Number of days AFS licensee was authorised to provide financial service in the leviable financial year
Custodians1.0421,0231,018Flat Levy
Financial Advice Providers - AFS licensees authorised to provide financial product advice on relevant products to retail clients25.0312,985 1,500 (plus $907 per adviser)Adjusted number of advisers on ASIC’s Financial Adviser Register and number of days authorised to provide financial services in the leviable financial year
Financial Advice Providers - AFS licensees authorised to provide financial product advice to retail clients, only on products that are not relevant products1.2326491,958Number of days AFS licensee was authorised to provide financial service in the leviable financial year
Financial Advice Providers - AFS licensees authorised to provide general financial product advice only0.8361,012828Number of days AFS licensee was authorised to provide financial service in the leviable financial year
Financial Advice Providers - AFS licensees authorised to provide financial product advice, only to wholesale clients0.8551,511566Flat Levy
AUSTRALIAN CREDIT LICENCES (ACLs)
Corporate SubsectorsBudgeted cost recovery amount
($ in Millions)
Number of EntitiesIndicative minimum levy/flat levy ($)Levy Metric Description
Credit Providers - (all)22.7481,1552,000 (plus $0.36 per $10,000 of credit provided above $100 million) (for other than small or medium amount credit contracts)Credit provided in the leviable financial year
Credit Providers (small and medium amount credit providers)1.261195NACredit provided in the leviable financial year under small and medium amount credit contracts
Credit intermediaries5.6575,1241,000 (plus $14.33 per credit representative)Credit representatives and number of days authorised in the leviable year

What do the Levies Pay for?

ASIC expects that $273 million of its total budgeted resources ($406.4 million) will be recovered by the cost recovery levies and statutory industry levies. The indicative levies also include $671,650 in ASIC’s unrecovered costs from the 2017-18 financial year.

Overall, the indicative levies are higher than the actual levies for the 2017-18 financial year. The draft CRIS notes that a key focus over the 2018-19 financial year will be implementing new approaches to ASIC’s supervisory and enforcement activities. The funding will help support the work of the Royal Commission, including ASIC’s response to the recommendations of the Royal Commission and the following new ASIC activities:

  • close and continuous monitoring – subject to consultation, a new subsector will be established for entities subject to close and continuous monitoring. Entities within this new subsector will be subject to a flat levy;
  • strengthened supervision of the superannuation sector; and
  • establishment of a corporate governance taskforce to undertake reviews of corporate governance practices in large listed entities.

The draft CRIS also includes a brief description of the various activities ASIC undertakes which are subject to industry funding (via the general industry levy). These include:

  • Supervision and surveillance – via the review of breach reports, conducting interviews and collecting documentary information, using information gathering powers (for example, under section 912C of the Corporations Act);
  • Enforcement – undertaking investigations, litigation, administrative decision making and handling appeals;
  • Industry engagement – consultation with industry, attending industry liaison meetings, responding to inquiries and requests for information;
  • Education – teaching of financial literacy in schools and workplaces, publications on ASIC’s MoneySmart website, developing tools for consumers;
  • Guidance – developing and consulting on regulatory proposals, issuing ASIC legislative instruments;
  • Policy advice – researching innovation, proposals on law reform, submissions to parliamentary and government inquiries on law reform;
  • Financial capability work – supporting financial literacy, delivery and providing access to financial information, supporting partnerships with other organisations.

What Next?

ASIC regulated entities will be required to submit business activity metrics via the Regulatory Portal prior to September 2019 to allow ASIC to appropriately calculate the levy. Those entities who do not submit their details by the appropriate date will nonetheless receive an invoice with an estimated levy. AFSL holders should also remember that the levy will be calculated on the basis of all authorisations included on the AFSL, including any authorisations which are not utilised throughout the 2018-19 financial year. Where an entity falls into more than one subsector, the invoice will include the relevant levies for all applicable subsectors.

The release of the draft CRIS allows industry participants to respond and provide ASIC with feedback prior to ASIC’s preparation of the final CRIS. Responses can be provided to ASIC by email at policy.submissions@asic.gov.au until 26 April 2019.

ASIC expects that the figures released in the draft CRIS will allow industry participants to ensure they budget appropriately for the levy which will be invoiced in January 2020. AFSL holders should make sure to include the levy in cashflow projections moving forward to avoid any inadvertent breaches of their financial requirements in RG166.

Further Reading

Alicia Pevely

Alicia works across both Sophie Grace Pty Ltd and Sophie Grace Legal Pty Ltd with a particular focus on compliance and legal services. She manages the licensing and compliance aspects of the business. She is responsible for AFSL and ACL applications, variations and assists the compliance team in the implementation of compliance reviews. She provides ongoing compliance support and assists with the preparation of legal advice, commercial agreements and disclosure documents.