What you need to know about the new ‘ASIC Industry Funding Model’
Legislation passed by the Government harbours a change to the way ASIC is to be funded. Under the new model, titled the ‘ASIC Industry Funding Model’, regulated entities will see their annual compliance costs increase.
Under the new ASIC Industry Funding Model, ASIC will now be able to recover its costs of regulation directly from regulated businesses via 48 new industry subsector levies. ASIC will now seek submissions of revenue and other key data from most regulated entities each year, and will spread the cost of regulation across the various industry subsectors. It is expected that ASIC will raise an additional $240 million per year under the new funding model.
Broadly, the levy imposed will be characterised by a minimum levy for each different subsector, alongside a variable component which is based on the entity’s activities they are licensed to perform, and their ‘market share’ metrics within their subsector.
Until the ‘Cost Recovery Implementation Statement’ is published in October 2018 for the 2017/2018 year, an accurate cost of the levy that will be imposed will not be fully known for most regulated entities. For more information on these levy changes and how they affect your business, please see our article 'Changes to levies under the new ASIC Industry Funding Model'.
Which entities will this impact?
Effectively all ASIC regulated entities will face an additional compliance cost and reporting burden. This includes, large proprietary companies, listed and unlisted public companies, AFSL holders, registered Company and SMSF Auditors, credit unions, and other professional service sectors regulated by ASIC.
In addition to the standard Annual Review Fees and fees that already exist for the filing of forms with ASIC, listed and unlisted public Companies and Large Proprietary Companies will now see the following estimated extra levies imposed each year:
ASIC will now have the power to mandate the submission of key data of companies in order to determine its new ‘market share’ metrics. The data required will vary depending on the industry subsector that an entity falls within, and may be external data collected directly by ASIC or internal data required to be submitted annually.
For example, registered auditors of disclosing entities will need to provide ASIC with information on their audit and review revenue for the relevant year relating to those disclosing entities (internal, revenue based). Listed companies however, will be levied based on market capitalisation (external data) and conversely AFSL holders will be levied based on the number of advisors under each AFSL (internal volume based).
Therefore, depending on the subsector, entities will need to collect and submit different data to ASIC to enable them to calculate the ‘market share’ and associated levy.
What needs to be done?
Prior to 27 September 2018, regulated entities will need to provide ASIC with their business activity metrics for the previous financial year via the new ASIC Regulatory Portal. We note that only company directors or secretaries can perform initial entity registration in the ASIC Regulatory Portal.
Once the director or secretary have registered, you can then invite ESV to the portal to connect to the entity as the registered Agent, and assign the required user access to view confidential information and perform regulatory tasks on behalf of the entity.