Date posted: 30/08/2018 7 min read

Auditors, advisers hit by new ASIC fees

Changes to ASIC charges mean that SMSF auditors, financial advisers and others, including clients, now need to pay much higher fees to the regulator.

In Brief

  • Operators must report their business metrics on the ASIC online portal by 27 September this year.
  • CA ANZ says the new charges are too high, are controversial among members, and will deter new operators.
  • ASIC will send out invoices in January 2019, which must be paid by February.

Under controversial new federal government changes, SMSF auditors and financial advisers now have to pay sharply higher registration fees of about A$2000 to the Australian Securities and Investments Commission (ASIC). The charges are part of a new system of industry funding under which entities regulated by ASIC are required to pay the cost of regulation.

Accounting clients may also be affected. ASIC’s new industry funding model affects companies and industry operators including auditors, credit licensees, superannuation trustees, Australian financial services (AFS) licensees, market infrastructure providers, responsible entities and registered liquidators. The new system came into force on 1 July 2017 after recommendations by the Financial System Inquiry and government consultations with affected industries. 

The changes mean that fees for SMSF auditor registration have risen from A$107 last financial year to A$1927 now, (down from A$3429 originally proposed by ASIC). Applications to cancel SMSF registration also now cost A$899 (compared with A$234 to cancel a liquidator registration) and an application to vary conditions imposed on auditor registration costs A$1028. Similarly, financial advisers will now need to pay A$2058 to register with ASIC and superannuation trustees are also subject to fees. 

“All this is proving to be quite controversial with members, because fees are now so much higher than they used to be,” says Ceri-Ann Ross, Chartered Accountants ANZ Reporting & Assurance Leader.

Before 27 September 2018, operators must register their business metrics and information on the new ASIC Regulatory Portal (https://regulatoryportal.asic.gov.au) and complete a short online form. Metrics may include the value of superannuation assets, audit fee income, market capitalisation, the number of authorised representatives in financial services business, the value of total deposits or credit provided, or number of advisers on the financial advisers register.

Asked why the fees need to be so high, an ASIC spokesman told Acuity: “The previous fees for these activities did not reflect the actual cost of providing them, and the government sought input from industry on changes to address this.”

Financial penalties apply for non-compliance such as late payment. “The deadline is approaching and it is important for all regulated entities to complete the process or they may incur penalties,” the spokesman said. Non-lodgement of the IFM Metrics form by the due date of 27 September 2018 is a serious offence, he added. The shortfall penalty for failing to pay the right amount for industry funding invoices will be calculated monthly at 20% of the outstanding amount.

ASIC to send invoices

ASIC will send invoices for FY17-18 to affected businesses in January 2019, which must be paid in February 2019. Operators subject to fees should have already received a letter from ASIC that includes their industry funding security key, which is needed to register on the new system. While about 90% of ASIC’s regulatory activities will be recovered in the form of industry funding levies, 10% will be recovered via fees for service.

ASIC’s fees for service apply to specific activities in areas such as: 

* licensing and professional registrations

* assessing applications for relief

* compliance reviews of documents

* requests for changes to market operating rules.

Operators in various industry sectors will start paying fees for the first time or pay higher fees, with new pricing taking effect from 4 July 2018.

Steep fee rises

CA ANZ has raised concerns at the size of fee rises on the grounds they may discourage new auditor applications. “We remain concerned that fees even at the revised level will significantly impact the ability of the profession to attract and develop appropriately qualified talent. The proposed fee will make it difficult to provide the essential assurance services to the SMSF sector needs now and will discourage growth and innovation in the future,” a CA ANZ submission to the federal government said. The submission requests a review of the fees and process, but a spokesman for ASIC said the commission did not comment directly on submissions.

All this is proving to be quite controversial with members, because fees are now so much higher than they used to be.
Ceri-Ann Ross Chartered Accountants ANZ Reporting & Assurance Leader

ASIC’s Cost Recovery Implementation Statement (CRIS) – Fees for service, provides information about how ASIC will implement fees for service under industry funding. The cost of ASIC’s work in each subsector is forecast in this annual cost recovery statement from ASIC. 

In terms of industry funding levies, some entities will pay a flat levy, with the cost of regulating a subsector shared equally among the entities operating in that subsector. Other entities will pay a graduated levy, with the entity’s size or level of business activity determining their share of costs.

Who pays what?

ASIC says it hopes to recover A$238 million in costs in the 2017-18 financial year, with about A$4 million estimated to come from auditors of disclosing entities, more than A$28 million from financial advisers (fees levied on advisers will be up to A$2058 a year), A$7.2 million from superannuation trustees and A$1 million from registered company auditors (who are subject to a flat levy of A$222 a year). 

While many companies face higher fees because of the levies, there is some good news. Most small companies are not subject to the new fee model. “Unless they are licensed by ASIC for providing financial services, most small proprietary companies – the majority of Australia's approximately 2.4 million registered companies – will not need to visit the portal to submit or validate business activity metrics,” the ASIC spokesman told Acuity. “Instead, they will pay an additional A$4 on top of their annual review fee. This simple fee increase was designed to reduce the reporting burden on small proprietary companies.”

Similarly. Ms Ross points to some positive news for the charities sector: “We welcome the decision by government to amend the regulations so that registered charities are not required to pay ASIC’s industry funding levy.”  

To find out how much operators and their clients may need to pay, visit this page https://download.asic.gov.au/media/4685852/summary-of-2017-18-indicative-levies-published-28-march-2018.pdf

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ASIC fee for service law submission

CA ANZ submission on 30 April 2018 to Treasury Consultation on ASIC industry funding model.

Read it here