The new New Zealand insolvency practitioner regulation regime, commencing on 1 September 2020, will be funded in part by a $1 fee on all company filings, a policy reason being that all companies will benefit from the new regime whether as creditors or when they require insolvency services themselves.
The NZ Companies Office reports that annual return and company registration fees paid after 1 September 2020 will include an insolvency practitioner regulatory regime levy. This will go to fund the new regulatory regime under the Insolvency Practitioners Regulation Act 2019 under which the Registrar of Companies will have significant responsibilities, including setting up and running the online register of insolvency practitioners, and monitoring the regulatory system. The costs of these new responsibilities will be met by fees and levies.
The amount of the levy is NZ$1 +GST per company payable on the filing of the annual return. As the Office says,
‘all companies will benefit from the introduction of the [new regulation] regime, whether as creditors, or when they require insolvency services themselves’.
Insolvency practitioners will each pay a licence fee of $165 (plus GST) when a licence is issued, and an annual confirmation fee of $105 (plus GST). That cost is justified in that while insolvency practitioners will be subject to new regulatory requirements, they will also benefit from the increased confidence in insolvency practitioners generally.
Both fees will be payable initially to the insolvency practitioner’s accredited body, which will pass the fees on to the Registrar. Additional professional fees may also be payable directly to those bodies.
These accredited bodies are yet to be formally announced but are expected to be RITANZ and CAANZ.
The insolvency practitioner regulation scheme will be reviewed by the government in 2 years’ time to ensure that it is operating fairly and efficiently. Any changes to fees or the levy will be implemented at the beginning of 2022/23.
The NZ government had rejected alternate regulatory models as
“infeasible because the annual levy would need to be about $7,500 to $10,000 per practitioner. It is very likely that a levy at these levels would cause serious harm by driving practitioners who take fewer appointments out of the market”.
In Australia, ASIC is gathering information to enable it to calculate an IP’s share of ASIC’s costs of their regulation for the 2019-20 financial year and it will then issue industry funding invoices to recover those FY2019-20 regulatory costs at the end of January 2021.
These fees are in the order of those in the thousands of dollars rejected by New Zealand.
Apart from the policy rationale, ASIC’s regulatory costings have been more than queried, with ARITA pointing out that ASIC is
“unable to display more than a few budget line items for some $7.7 million of charges levied to the insolvency profession”,
being “particularly galling” given ASIC’s focus on the reporting and disclosure of practitioner remuneration.