ASIC industry funding model raised $316m in FY23–24

In its annual report for the 2023–24 financial year, the Australian Securities and Investments Commission (ASIC) detailed that it collected $2.1 billion, an increase of 12 per cent on FY22–23, with $316 million coming through the industry funding model.

The corporate regulator has had its operating costs paid through this model since the 2017–18 financial year, with ASIC explaining in the annual report that around 99 per cent of its operating costs are recovered from the industries it regulates.

“Around 70 per cent of these costs are funded through the industry funding model and the remaining 29 per cent through fees and charges collected by ASIC,” it said.

The report added: “ASIC also collects revenue on behalf of the Australian government under the Corporations Act 2001 (Corporations Act) and the National Consumer Credit Protection Act 2009 (National Credit Act), in addition to the funding from industries ASIC regulates and fees paid for services provided, details of which are outlined in the financial statements.”

ASIC added it reported a surplus of $31 million for the financial year, which it said “was the result of several factors”.

The regulator also stressed that all of the funds it collects go into consolidated revenue and are “not available to ASIC”.

“This revenue collected is passed on to the Commonwealth and is not kept by ASIC,” it said.

The industry funding model for the advice profession has come under continued scrutiny since the freeze instituted during COVID-19 was lifted last year.

In July, the Senate economics references committee recommended an overhaul of the regulator’s funding model.

Specifically, recommendation 11 argued for a reduction in levies charged to various subsectors and followed persistent lobbying by stakeholders in the financial advice profession, who have long argued that ASIC’s funding model lacks transparency and imposes undue fees on financial advisers, compromising their ability to provide quality financial services to consumers.

Also in July, ASIC released its draft Cost Recovery Implementation Statement (CRIS) that detailed the cost of regulating licensees that provide personal advice to retail clients was $48.4 million in 2023–24, with this to be divided among a total of 2,766 Australian Financial Services licensees, encompassing 15,371 advisers.

As such, the levy will amount to a minimum $1,500 plus $2,878 per adviser, which is slightly higher than the previous financial year’s rate of $2,818 per adviser, which had been adjusted downward from $3,217 after widespread outrage and advocacy.

Transformation program

The regulator’s annual report put the focus on its ongoing transformation program, with chair Joe Longo remarking that ASIC has made “significant progress” over the last three years.

“We are seeing the benefits of our transformation work as an agency,” Longo said.

“Change and transformation also naturally lead to disruption and we acknowledge there are areas we can continue to improve.

“There is always more to be done to keep delivering for consumers, businesses, and the community we serve.

“We have seen a number of changes in ASIC’s executive leadership team over the last year, which means we are well positioned to meet the challenges and opportunities the agency faces.

“We will continue to evolve and respond to new challenges in our operating environment and to the threats and harms that emerge.”

ASIC said these operational improvements have resulted in better outcomes in FY23–24, noting that it had achieved “several regulatory and enforcement firsts”, including the first win in a greenwashing civil penalty action, the first stop order on a life insurance product, and the first infringement notice issued to a market operator, the ASX.

In 2023–24, ASIC commenced around 170 new investigations, which it said was an increase of about 25 per cent on the previous year, while new civil proceedings were up 23 per cent.