ASIC user pays - consultation paper released

The Treasury has released its draft legislation for the ASIC Supervisory Cost Recovery Levy (Collection) Bill 2017 (& ancillary bills) regarding ASIC’s previously foreshadowed move to a cost recovery, or user pays, model.

The draft Bill is effectively the enabling legislation for the cost recovery model and the specific details of the models to be applied to each regulated sector is be detailed in the Regulations. These Regulations are not likely to be available for consultation until the Bill is in Parliament or even passed. We believe this is an unfair approach and that all of the legislative instruments should be available for concurrent review for Parliament to make an informed decision and for those impacted by the changes to be able to make reasonable representations on it.

ARITA maintains its concerns about the impact of any model proposed within this framework. The model remains one in which registered liquidators will have no certainty as to cost due to the ex-poste recovery nature of the fee and we continue to object to the quantum of circa $8.5 million to be recovered from just 700 registered liquidators – a fee which, at an average of $12,500 per liquidator will be at least 10 times any global comparative fee. The proposed model will most harm small and regional practices who provide a vital service especially to the SME community. We also strongly believe that the special status of liquidators both as officers of the Court and, effectively as an extension of ASIC through the investigations and reporting work that you undertake – often not just for no fee but at an actual loss of even direct costs – places liquidators in a category worthy of full exemption from these taxes.

We continue to estimate that around 30% of registered liquidators are likely to exit their registration in the first two years of this system. The extraordinary, negative impact that this will have on competition and the availability of services will be profound and is not in the best interests of the economy.

We also believe that the model is likely to lead to an increase in zombie companies and will be exploited by pre-insolvency advisers to avoid investigations of dodgy directors.

In addition to the above, and with some acceptance that registered liquidators are unlikely to be excluded from any cost recovery model, we continue to work with The Treasury and ASIC to highlight the importance of a model that spreads the cost proportionally and will somewhat adjust for unfunded appointments.