ASIC has published its cost recovery implementation statement for 2019-20, and the levies stipulated for financial advice businesses have led to some outrage throughout the industry.
Coming on the heels of an FPA submission to the 2021-22 Budget which argued that the ASIC funding levy needs to be more predictable for advice businesses, ASIC’s new advice levies represent a significant (160%) increase over the previous period. The advice industry will be billed $1,500 per retail licence plus a further $2,426 per authorised adviser under the licence.
For those licensees that provide personal advice to retail clients that aren’t relevant financial products, there is a flat levy of $2,064, and licensees that only provide general advice will be charged a flat fee of $2,081.
In a joint response, Chartered Accountants Australia and New Zealand, CPA Australia, Financial Planning Association of Australia, Institute of Public Accountants and SMSF Association have described the significant levy increase as “shameful,” adding that it “highlights serious issues with the funding model and will hasten the exodus of advisers from the industry.”
The statement lists these issues as being:
- that the model doesn’t account for changing dynamics in the industry
- that it contributes to the number of advisers leaving the industry
- that those who choose to remain in the industry “shoulder a disproportionate cost burden”
- ASIC’s initial estimates often don’t reflect the final levies, which makes budgeting difficult
- penalties and fines are diverted to consolidated revenue instead of off-setting these levies
“Declining adviser numbers mean that remaining participants must shoulder a heavier proportion of the total cost,” the joint statement continues. “This is impacting the viability of remaining businesses. Ultimately, this has flow on-effects for competition and the accessibility and affordability of financial advice.”
In order to rectify these problems, the five groups suggest an immediate review of the industry funding model along with a reduction or removal of the latest levy increase. They also argue that ASIC should be funded from consolidated revenue and that future funding levies should “reflect the cost of regulation and not fund other budgetary measures.”
