ASIC has released its analysis of the costs of regulation of liquidators; AFSA has issued comparable analyses of the costs of regulation of trustees. ASIC’s cost of regulating liquidators was $7.481m in 2023-2024. There is no evident way of making regulatory cost efficiency assessments because each of ASIC and AFSA is separately regulated by different departments. One common feature is that each regulator has suffered significant misappropriations of moneys from administered estates, or as alleged. Regulatory comparisons would be useful.
Corporate Insolvency
ASIC has released its 2023-2024 schedule of costs of regulation of particular sectors, upon which its costs recovery is based. See ASIC industry funding: 2023-24 dashboard of regulatory costs and summary of variances have been released | ASIC
Each year, ASIC publishes a Cost Recovery Implementation Statement (CRIS Cost recovery implementation statement 2023-24 | ASIC) which provides information on how it implements its ‘industry funding model’. The model for 2023-2024 shows the costs of ASIC’s regulatory activities for each industry subsector and its user-initiated and transaction-based regulatory costs via fees for service in that year.
The CRIS contains ASIC’s estimated costs and levies for each industry subsector in 2023-24
“to help entities plan and budget for the levies and fees to be charged. The figures in the CRIS are indicative only. Levy notices will be issued between January and March 2025 after actual levies have been calculated”.
ASIC’s cost of regulating the liquidator subsector in 2022–23 was $5.1 million; it was $7.481m in 2023-2024. Supervision and surveillance totaled $1.325m and enforcement $2.887m.
ASIC says its work in relation to registered liquidators seeks to ensure that they fulfil their statutory duties and roles as fiduciaries diligently and independently.
Personal insolvency
AFSA’s comparable details are in its portfolio budget statement and its 2023-2027 regulatory strategy. See Portfolio Budget Statements 2024–25: Australian Financial Security Authority and AFSA Regulatory Strategy 2023-27 | Australian Financial Security Authority
Under the Bankruptcy (Estate Charges) (Amount of Charge Payable) Determination 2015, a levy of 7% is imposed on all asset sales by registered trustees. That percentage has not changed since 2015.
Comparisons not available
Experienced financial analysts can try to relevantly compare the costs of ASIC’s regulation of 650 liquidators with the costs of AFSA regulating 220 trustees; many of whom are co-registered.
While the government in 2015 said it did not accept the 2010 Senate Committee recommendation that the corporate insolvency arm of ASIC be transferred to AFSA to form a new personal and corporate insolvency regulator, the government did recognise that providing for greater
“alignment of the laws that govern insolvency administration and insolvency practitioner regulation would benefit insolvency practitioners, creditors, shareholders, regulators and other stakeholders”: Ex Memo, ILRB 2015.
That alignment under the common Schedules and Rules to the Corporations Act and the Bankruptcy Act extends to common requirements for standards of personal and corporate insolvency practitioners, reporting, funds handling and audits.
For example, each of ASIC and AFSA can audit the books of liquidators and trustees and require reports to be provided.
But the alignment does not extend to how each regulator pursues the compliance with those requirements and at what cost and efficiency.
In the absence of any financial comparisons being offered, one measure of the comparative effectiveness of each of ASIC’s and AFSA’s processes of regulation may be available in the post mortem assessments of the regulation of the administrations handled by Mr Amos as liquidator and Mr Leroy as trustee.
See Former liquidator sentenced to 4 years jail, 2 years non-parole – Murrays Legal
