The Federal Government has provided financial planning firms and other companies working in the financial services industry with the draft legislation underpinning the fee for service funding model for the Australian Securities and Investments Commission (ASIC) and confirming a substantial lift in costs.
The draft legislation would see the hourly rate charged by ASIC increased from $70 an hour to $175.95 an hour.
At the core of the Government’s legislation were substantially higher caps on the fees that can be charged by ASIC, rising from $10,000 to $200,000 in some cases and from $50,000 to $300,000 in others.
The explanatory memorandum accompanying the legislation said the $10,000 cap was being increased to $200,000 to allow ASIC to better align its fees “to ensure cost recovery of the costs ASIC incurs when providing regulatory services”.
It went on to say that allow ASIC the ability to determine the criteria and complexity of matters would allow the regulator to be able to better recover the costs of its regulatory activities.
“This will ensure entities will pay the appropriate fee based on the complexity of the transaction for the service ASIC provides,” the explanatory memorandum said.
Elsewhere, the explanatory material referred to the formula that ASIC uses to charge fees in relation to granting market licences and dealing with potential conflict, adding that “the fee is the hourly rate times the number of minutes taken divided by 60”
“The hourly rate will increase from $70 to $175.95, to closely reflect the costs ASIC incurs,” it said.
Releasing the draft legislation for consultation, the Minister for Revenue and Financial Services, Kelly O’Dwyer said an industry funding model was a critical component of the Government's reforms to strengthen ASIC and better protect Australian consumers.
“Industry funding ensures that the costs of regulation are borne by those that have created the need for it, rather than the Australian public.,” she said. “These proposed amendments allow ASIC to better align its fees, by enabling ASIC to charge a cost reflective fee for the services it provides for a specific entity.”