The Australian Securities and Investments Commission announced on Wednesday it would take a new tack, putting the country's biggest financial institutions on notice that if any of them are found guilty as a result of investigations into manipulation in the bank bill swap rate and foreign exchange markets they could be slugged with an invoice to recover the expenses and costs of its investigations.

Embattled stockbroker BBY is another company that could be up for additional costs if ASIC is successful in securing a court order against it.

"This is a decision that has been made based on a belief in the principle that those who cause the need for regulation should pay for it," ASIC commissioner Cathie Armour said.

"ASIC has reviewed its approach and considers that it should more frequently seek to recover the expenses and costs of an investigation from the person who has caused those expenses and costs to be incurred.

"Accordingly, ASIC will consider making an order for the recovery of its investigation expenses and costs in each case where the legislative requirements are met."

ASIC commissioner John Price said the regulator had "rarely" exercised these powers since they were granted 14 years ago and until recently it has not had the systems and processes in place to be able to accurately record the specific costs associated with looking into particular individuals and companies.

Using the measure would combat "tactical litigation", Mr Price said. 

Strong incentive

"It creates quite a strong incentive for people not to unnecessarily draw out investigations ... I'm not sure why it hasn't been taken up in the past."

Section 91 of the ASIC Act 2001 allows that ASIC can make an order to recover investigation expenses and costs where that investigation has led to a successful prosecution or civil proceeding against a person.

This is separate and in addition to any legal costs a court might order a guilty party to pay to ASIC.

It includes: 

• Salary costs for ASIC staff who have worked on the investigation.
• Travel expenses.
• The cost of external legal counsel.
• The cost of employing an expert to perform an analysis.

The new approach will be applied to investigations starting from July 29, 2015, as well as some investigations started before this date that were yet to result in legal proceedings or voluntary undertakings.

As part of its considerations ASIC will weigh a number of factors, including the resources of the target to pay the costs, the extent of ASIC's success, the effect on victims and the degree of culpability.

"The cost-recovery push by ASIC is likely to have the most relevance to those very large, complex cases that the regulator dedicates a large amount of resources to over a long period of time, such as its current investigations into manipulation in the Bank Bill Swap Rate and foreign exchange markets," Herbert Smith Freehills partner Andrew Eastwood said.

The move to start clawing back investigation costs from guilty parties comes as the commission is under intense funding pressure.

"The timing seems to reflects that ASIC currently has a number of major investigations under way involving big financial institutions. These investigations require a large amount of taxpayer money to fund and if ASIC gets some wins in court it would obviously like to be able to recoup some of that," King Wood Mallesons partner Alexander Morris said.

ASIC's business model is up for consideration following 2014's financial system inquiry led by former Commonwealth Bank boss David Murray. The review proposed a much harder line on corporate crime and greater reliance on user pays rather than central government grants.

The government response to the inquiry is due any day and it has already begun a process to privatise ASIC's corporate registry.