ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021

Administered by Department of the Treasury

Legislation au F2021L00135 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Issued by authority of the Treasurer

ASIC Supervisory Cost Recovery Levy Act 2017

ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021

Section 13 of the ASIC Supervisory Cost Recovery Levy Act 2017 provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

Schedule 2 to the Financial Sector Reform (Hayne Royal Commission Response) (2021 Measures No. 1) Regulations 2021 amend the Corporations Regulations 2001 to make handling an insurance claim a ‘financial service’ under the Corporations Act 2001.

The purpose of the ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021 (the Regulations) is to make amendments to the ASIC Supervisory Cost Recovery Levy Regulations 2017 allow Australian Securities and Investments Commission (ASIC) to recover costs from its regulation of activities undertaken by people who handle insurance claims.

The ASIC Supervisory Cost Recovery Levy Act 2017 requires the Minister be satisfied that the Regulations are consistent with the objectives of the cost recovery regime in subsection 9(2) of the ASIC Supervisory Cost Recovery Levy Act 2017.

The Regulations were consulted on as part of the public consultation for Schedule 2 to the Financial Sector Reform (Hayne Royal Commission Response) (2021 Measures No. 1) Regulations 2021. Public consultation on Schedule 2 to the Financial Sector Reform (Hayne Royal Commission Response) (2021 Measures No. 1) Regulations 2021 was conducted between 29 November 2019 and 10 January 2020. Treasury received 37 submissions. Consultation included feedback from consumer groups, industry and ASIC.

The Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has been certified as being informed by a process and analysis equivalent to a Regulation Impact Statement for the purposes of the Government decision to implement this reform. The Office of Best Practice Regulation has agreed that this measure will result in a compliance cost of $4.8 million a year for business.

The Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry can be accessed through the Australian Parliament House website.[1]

Details of the Regulations are set out in Attachment A

The Regulations are a legislative instrument for the purposes of the Legislation Act 2003.

The Regulations commenced on the day after the instrument is registered on the Federal Register of Legislation.

A statement of Compatibility with Human Rights is at Attachment B.

ATTACHMENT A

Details of the ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021

 Section 1 – Name of the Regulations

This section provides that the name of the Regulations is the ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021 (the Regulations).

Section 2 – Commencement

This section provides that the Regulations commence on the day after the instrument is registered on the Federal Register of Legislation.

Section 3 – Authority

The Regulations are made under the ASIC Supervisory Cost Recovery Levy Act 2017 (the Act).

Section 4 – Schedule

This section provides that each instrument that is specified in the Schedules to this instrument will be amended or repealed as set out in the applicable items in the Schedules, and any other item in the Schedules to this instrument has effect according to its terms.

Schedule 1 – Amendments to the ASIC Supervisory Cost Recovery Levy Regulations 2017

Entities that are regulated by Australian Securities and Investments Commission (ASIC) are required to pay a levy (the cost recovery levy) to enable ASIC to recover its regulatory costs. The levy is payable once ASIC issues the leviable entity with a notice setting out its liability for the levy. The 'industry pays' model means that the funding of regulatory activities undertaken by ASIC is met by those creating the need for regulation, rather than the Australian taxpayer.

The levy is imposed by the Act and the amount of levy payable by a leviable entity for a financial year is the amount worked out in accordance with the ASIC Supervisory Cost Recovery Levy Regulations 2017.

Item 1 – Section 72AA

Item 1 inserts a new provision into the ASIC Supervisory Cost Recovery Levy Regulations 2017 to enable ASIC to recover its regulatory costs associated with supervising people who handle insurance claims.

Section 72AA creates a new sub-sector called the ‘claims handling and settling services providers’ sub-sector in the insurance sector for the purposes of calculating the amount of levy payable.

An entity forms part of the new claims handling and settling services providers subsector if they hold an Australian financial services licence which authorises them to provide claims handling and settling services. 

A leviable entity’s levy component in respect of the new sub-sector includes the minimum levy component for the sub-sector and the graduated levy component for the sub-sector.

The minimum levy component is $500 for each licence and the graduate levy component will be worked out in accordance with section 10 of the ASIC Supervisory Cost Recovery Levy Regulations 2017.

One factor required for the calculation of a leviable entity’s graduated levy component is the leviable entity’s entity metric. The entity metric is designed to represent a leviable entity’s overall contribution to ASIC’s enforcement and surveillance activities for each sub-sector. The cost to undertake these regulatory activities varies significantly—the conduct and behaviour of industry participants influences ASIC’s risk assessment of the sub-sector and the level of regulatory oversight required.

In order to represent a leviable entity’s overall contribution to ASIC’s enforceable and surveillance activities for each sub-sector, new section 72AA includes a leviable entity’s entity metric to be the number of claims the entity handles during the financial year. ASIC will prescribe the amount for each claim handled as part of its annual legislative instrument for each financial year.

Item 2 – Application of the amendments

Item 2 inserts an application provision into new Division 2 of Part 5 of the ASIC Supervisory Cost Recovery Levy Regulations 2017 to provide that the amendments to this instrument made by Schedule 1 to the Regulations apply in relation to the 2021‑22 financial year and later financial years.

Item 3 – Amendment to Schedule 1 to the ASIC Supervisory Cost Recovery Levy Regulations 2017

The Regulations also makes a consequential amendment to Schedule 1 to the ASIC Supervisory Cost Recovery Levy Regulations 2017 to include claims handling and settling services providers in the list of sub-sectors. 

 

ATTACHMENT B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021

The ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021 (the Regulations) are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The purpose of the Regulations is to make amendments to the ASIC Supervisory Cost Recovery Levy Regulations 2017 (the Cost Recovery Levy Regulations) to allow ASIC to recover costs from its regulation of activities undertaken by people who handle insurance claims.

Human rights implications

The Regulations does not engage any of the applicable rights or freedoms.

Conclusion

This Regulations are compatible with human rights as it does not raise any human rights issues.

 

[1] https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22publicatio ns%2Ftabledpapers%2Fbc83795c-b7fa-4b42-a93b-fa012cffffc2%22

Overview

The ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021 were enacted to address the need for Australian Securities and Investments Commission (ASIC) to recover costs associated with its regulation of activities undertaken by people who handle insurance claims. This legislation was introduced to amend the ASIC Supervisory Cost Recovery Levy Regulations 2017, allowing ASIC to impose a levy on entities within the insurance sector that provide claims handling and settling services. The objective is to ensure that the entities contributing to the financial services sector, specifically in claims handling and settling, bear the costs of ASIC's regulatory activities rather than the Australian taxpayer. Enacted by the Parliament of Australia under the authority of the ASIC Supervisory Cost Recovery Levy Act 2017, these regulations aim to maintain the 'industry pays' model of regulatory funding. The Regulations were developed in response to the recommendations of the Hayne Royal Commission and were subject to public consultation, receiving feedback from consumer groups, industry stakeholders, and ASIC itself.

Scope and Application

The ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021 applies to entities regulated by the Australian Securities and Investments Commission (ASIC) that handle insurance claims, specifically those holding an Australian Financial Services Licence (AFSL) which authorises them to provide claims handling and settling services. These entities are required to pay a levy to enable ASIC to recover its regulatory costs associated with supervising people who handle insurance claims. The levy is calculated in accordance with the ASIC Supervisory Cost Recovery Levy Regulations 2017, with a new provision introduced to account for the claims handling and settling services providers sub-sector. The Regulations apply in relation to the 2021-22 financial year and subsequent financial years. There are no stated exclusions, exemptions, or thresholds in the Regulations themselves, although the underlying Act and subordinate instruments may contain provisions that affect the application or scope of the Regulations. The Regulations extend the application of the ASIC Supervisory Cost Recovery Levy Act 2017 by introducing a new sub-sector for claims handling and settling services providers. The compatibility with human rights is addressed in Attachment B of the explanatory statement, which concludes that the Regulations are compatible with human rights as they do not raise any human rights issues.

Key Provisions

The ASIC Supervisory Cost Recovery Levy Amendment (Claims Handling and Settling Services Providers) Regulations 2021 (the Regulations) make amendments to the ASIC Supervisory Cost Recovery Levy Regulations 2017 to allow the Australian Securities and Investments Commission (ASIC) to recover costs associated with its regulation of activities undertaken by people who handle insurance claims. This is achieved by introducing a new sub-sector called the 'claims handling and settling services providers' sub-sector within the insurance sector (section 72AA). This new sub-sector includes entities that hold an Australian financial services licence and are authorised to provide claims handling and settling services. The Regulations specify the method for calculating the levy, which includes a minimum levy component of $500 for each licence and a graduated levy component determined by the number of claims handled by the entity during the financial year (Item 1). Under the Regulations, entities regulated by ASIC that fall within the new claims handling and settling services providers sub-sector must comply with the requirements to pay the cost recovery levy. The levy is designed to fund ASIC's regulatory activities and is calculated in accordance with the ASIC Supervisory Cost Recovery Levy Regulations 2017. The Regulations ensure that the funding for regulatory activities is met by those creating the need for regulation, rather than the Australian taxpayer (Schedule 1, Item 2). The amendments apply from the 2021-22 financial year and later financial years. Failure to comply with the provisions of the Regulations may result in penalties. Although the specific penalties are not detailed in the explanatory statement, non-compliance with regulatory requirements under the ASIC Supervisory Cost Recovery Levy Act 2017 can generally lead to civil or criminal penalties. These can include fines for individuals and corporations, depending on the severity and intent of the breach. The precise penalties would be determined in accordance with the governing Act and any relevant case law. The Regulations have been designed to be compatible with human rights, as outlined in the Statement of Compatibility with Human Rights (Attachment B). The statement confirms that the Regulations do not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. This ensures that the Regulations do not infringe on human rights and are in line with international human rights standards.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.