With the 2018 financial year over, government agencies need to prepare their annual reports, which, commonly, are becoming increasingly opaque.
But two interesting reports will be those of ASIC, in relation to corporate insolvency, and AFSA, in relation to personal insolvency.
As to ASIC, under the changes made under the industry funding levy legislation, and
“to increase transparency of ASIC’s expenditure, ASIC must publish on its website information in relation to its regulatory costs for the previous financial year as soon as practicable after 31 October each year”.
This is provided for in s 138 ASIC Act 2001.
As the Explanatory Memorandum to the relevant Bill explains,
“this information must relate to the financial year that finished on 30 June of that year. As this obligation applies to financial years that end after the commencement of the ASIC Supervisory Cost Recovery Levy Act 2017, the first year that ASIC will be required to publish this in relation to will be the 2017-18 financial year”.
The Memorandum continues:
“The information that ASIC is required to publish must include its total regulatory costs in relation to leviable entities, and how it has apportioned those costs across each sector and sub-sector. In relation to each sector, ASIC is also required to publish how it has apportioned its costs by reference to the types of activities undertaken and the different kinds of expenses incurred by ASIC in the financial year”.
Insolvency regulation and its costs
In the area of insolvency, we have the two government regulators – ASIC and AFSA. They each regulate practitioners under what are now harmonised laws and practice requirements. In fact, the two regulators each regulate many of the same practitioners, given that many trustees are also liquidators.
But, for reasons to do with culture and history, ASIC and AFSA regulate practitioners quite differently, and, apparently, quite independently.
Regardless, their respective regulatory costs will offer an interesting comparison of their respective financial efficiency. The regulatory costs of one should be able to be compared and benchmarked against the other. The $10 million ASIC says it will cost to regulate 600 liquidators annually should be able to be usefully compared with whatever AFSA spends on regulating its 200 trustees.
There is no particular legislative requirement for AFSA to analyse and publish its regulatory costs, as there is with ASIC, but the respective agencies’ serious responsibilities under the Public Governance, Performance and Accountability Act 2013 should prompt them both to offer financial information to allow their respective costs of regulation to be compared.
Both reports are due in October 2018 or soon after.