Liquidators’ oversee Adrian Brown: has halved the proposed $5000/yr liquidator’s levy.
The recently scaled-back commissar of liquidator oversight has contacted his charges to advise of a scaled back proposal for the impending liquidators’ levy.
In an email sent to all registered liquidators yesterday afternoon, ASIC senior executive leader Adrian Brown said that the annual fee they are to pay ASIC to regulate them will be $2500 instead of $5000 under a revised industry funding model.
“Following the consultation process, ASIC worked with Treasury to develop an alternative option for the Minister’s consideration,” Brown said in his email. “The alternative option considered industry’s concerns with the previous model within the constraints of the Cost Recovery Guidelines and principles.”
As well as announcing the halving of the proposed annual fixed fee, the email detailed the other charges to be imposed on liquidators to cover the estimated $9 million a year ASIC says it costs the regulator to keep liquidators in line.
Included is an approximate fee of $110 for every existing external administration as well as every new appointment and $110 for every “notifiable event”, the definition of which is as follows:
The following notices published on ASIC’s Published Notices Website:
- notice of meetings;
- notice of disclaimer of property;
- notice to submit particulars of debt or claim;
- notice to creditors to submit formal proof;
- notice of intention to declare a dividend; and
the following lodgements with ASIC:
- notice of the outcome of a proposal to pass a resolution without a meeting;
- execution of a deed of company arrangement.
And, for the purpose of calculating the number of notifiable events, the following lodgements are considered a single lodgement:
- where more than one proposal to pass a resolution without a meeting for a company is decided on a particular date; and
- a deed of company arrangement involves more than one company under external administration.
Brown said that the amended proposal has a number of advantages, including:
- The metric recognises the underlying, and fundamental, principle that the regulated population bears the cost of their regulation;
- The metric is more consistent with the model’s objectives of simplicity and proportionality; and
- A lower fixed levy addresses concerns about the impact on smaller entities and is less likely to act as a barrier to entry for new participants.
ARITA chief executive John Winter said the amendments, while welcome, amounted to no more than extra lipstick on the same pig. The industry funding model would remain broken until it accounted for all the unpaid work insolvency practitioners performed for ASIC, a figure he said ARITA was about to disclose.
“We are about to reveal the results of a recent survey that shows insolvency firms have to write off about $100 million a year in unrecoverable remuneration,” Winter said last night.
“Worse still, you won’t know what this cost is until up to more than a year after you incur it. Because of the delay in being able to crystallise what the cost is, it’s unlikely you will be able to pass it through to an appointment, so the cost will need to be absorbed through rate increases and every practitioner knows that they are under pressure from judges on down to reduce, not increase, rates,” he said.
As for the new industry levy model spurring competition and lowering barriers to entry, Winter said the industry view could not be more pessimistic.
“We still expect that this will force close to 30% of registered liquidators to hand back their tickets in the first couple of years of operation. It’s going to gut competition, where, perversely, increasing competitions was one of the themes of the Insolvency Law Reform Act,” he said.
“It’s going to hit small and regional firms the hardest. Chances for future generations of registered liquidators will be stamped on. Most significantly, we think it’s going to turbocharge the dodgy pre-insolvency market and ramp up phoenixing just as the government claims they are trying to act on it.”
Perhaps it’s no wonder that Brown, who SiN recently revealed was reducing his work commitments as head of liquidator enforcement to three days a week, is “scaling back”.
See also:
Hmm so the new proposal is designed to meet the model’s objectives “of simplicity and proportionality”. What I see is tax on me personally and:
* I won’t know what it is until 3 months after the financial year it applies to;
* I will be disincentivised to pay dividends and call meetings of creditors (as it costs me money personally);
* Even on a no asset CVL the charge will be at least $330 but could be significantly higher if I receive a raft of Disclaimer requests or pay a dividend – but I won’t know any of that when I am consenting;
* Because the ASIC costs to be recovered will be set, if there is less insolvency work around, the fee per notifiable event will be higher – so the less profitable we are the higher the tax per notifiable event!
So we are left with a super regressive personal tax that is of an unknown amount and disincentives professionals from doing the job they should be doing.
I’ve checked my Economics 101 text book, and that is exactly what a tax should NOT be.
The idea that creating a series of “notifiable event” triggers for paying fees is not a “simple” nor sensible idea. It is just an attempt to hide the actual cost. Indeed, it adds to handling costs and increases the burden. This sort of logic is bureaucratic non-sense that only someone without any regard for the actual time taken/wasted on meaningless process could conceive.
Brown and his team are a joke and a blight on the economy. Watch the number of practitioners walk away from the profession and move into pre-insolvency, no registration fees, no lodgement fees and no regulator.
Disclaiming onerous (worthless property) what are they smoking? Still $110 for a no funds court liquidation is too much. In the absence of companies footing the bill for the misdeeds via the annual review fee, why won\’t they consider a percentage of remuneration banked, surely that is the only equitable way to do it? Is it unpalatable because it may increase the cost to creditors; no matter which way they cut it that is going to occur.
I won’t say that the profession lost this fight when the single insolvency regulator recommended in 2010 was rejected, with the support of many corporate practitioners, and again during ASIC’s capability review.
But being constructive, ASIC should not be central to these discussions, as it appears to be. It does not make law or policy, despite its attempts otherwise. Or, if ASIC is to be involved, it should be with ASIC Commissioners.
Putting ASIC aside, it is the secretaries or senior officers of the departments who should be in these discussions, including that of the department of finance.
But more importantly, any discussions should involve the Inspector-General in Bankruptcy and AGD.
One main purpose of the ILRA was to have trustees and liquidators be subject to the same harmonized insolvency regime. Is the government saying that, despite this, the costs of ASIC’s regulation of liquidator Smith and of AFSA’s regulation of the same trustee Smith should be allowed to differ, or not even be benchmarked, one against the other?
It is AGD and the Inspector-General who will have all the answers on AFSA’s costs of regulation per trustee, and how these costs are recouped. Those figures, offered me by AFSA, are in its costs recovery calculations on which the trustee profession is invited to participate. Any practitioner can examine AFSA’s Activity Based Costing Model which allocates its costs and derives fees and charges, online, through AER, and then track AFSA’s two broad costs allocations, its direct attributable costs for its Regulation and Enforcement (R&E) cost centres (see the 1 July 2015 Costs Recovery statement); and the indirect costs, according to its allocation methodologies. Details are on AFSA’s website.
Then have ASIC disclose its comparable methodology, or have a forensics team do it for them.
The profession can be assured though that whomever within the Commonwealth it chooses to deal will not need to be reminded of their governance obligations under the Public Governance, Performance and Accountability Act, including their mutual obligations to cooperate to ensure the smooth transition to a harmonized insolvency and regulatory regime according to the broad intent of the ILRA.
At least, this is the tack I am taking, though admittedly, my ‘reasonable requests’ to government (s 70-40 refers) remain unanswered to date.