ASIC made the responses after a number of submissions to the draft CRIS in July raised issues in relation to the increase in levies and allocations of costs to its regulatory activities and variations between estimated and actual levies.
Submissions also focused on the design of the funding model and costs transparency.
“An increase in levies for a subsector is a reflection of ASIC’s more intensive regulatory activities in that subsector,” ASIC said in the CRIS.
“We take an active role to enforce the laws we administer to maintain integrity and trust in the financial system and this includes regulating the boundaries of permitted conduct.”
ASIC says the costs of investigating suspected misconduct in the course of deciding whether to pursue an enforcement remedy or any non-enforcement outcomes are a necessary part of the costs of regulating a subsector.
“When ASIC pursues a matter in the courts, we actively seek to recover our investigation and litigation costs whenever the matters are successful,” the regulator said. “The actual amount recovered varies.”
Financial advisers have in the last several months stepped up their concerns over the levies they have to pay and want a change to the funding model’s calculation method.
ASIC confirms in the 2020/21 CRIS released last week that the graduated component of the levy for the financial advice sector would be capped at the 2018/19 level of $1142 per adviser for the last financial year and also this fiscal period.
The Government announced the levy relief in August after an outcry from adviser peak bodies.
ASIC says its cost of regulating advice licensees in 2019/20 was $56.2 million and estimates it will be around $71.4 million in 2020/21.
“Following the decision to cap levies, and assuming an estimated 18,750 advisers and 2934 licensees in 2020/21, the estimated costs that will be recovered from this subsector for 2020/21 is $25.8 million,” ASIC said.
The CRIS estimates the general and life insurance industry will pay supervisory levies of about $24.702 million. It gives no breakdown for general and life insurance.
ASIC says the final CRIS released last week summarises the feedback it received and the actual levies will be published next month, followed by issuance of invoices in January.
The regulator consulted in July on the draft CRIS, an exercise it has carried out annually since the government announced in 2016 the introduction of an industry funding model to support ASIC’s supervision of the financial services sector.
Click here for the CRIS.