Back in May, we discussed the absence of any substantial relief measures for advisers in the 2023-24 Budget.
Notably, there were no clear plans regarding how (or indeed if) the Government would address the ASIC levy freeze, which ended last year. At the time, Financial Advice Association of Australia (FAAA) CEO Sarah Abood argued that it should be a “high priority to minimise the impact of the levy being unfrozen from the current financial year” because “[reducing] the business costs involved in the provision of advice … [is] a great way to make financial advice more affordable for consumers.”
Just over a month later, ASIC released its cost recovery implementation statement (CRIS) for the 2023 financial year. In addition to a flat $1,500 fee per license, the graduated levy worked out to $3,217 per adviser – higher than the $3,138 figure the industry was facing before the Coalition intervened in 2021.
Commenting on this, Abood said that the levy freeze “was achieved as a result of strong advocacy on the need for fairness and equity in the way the levy is calculated. This resulted in substantial savings for the financial advice profession in the 2020/21 and 2021/22 years. We are extremely concerned to see the impact of the end of the freeze on the ASIC levy resulting in an almost tripling of the per-adviser cost.”
Abood also noted that the latest CRIS arrived while the recommendations from the review of the industry funding model were still awaiting implementation. Among other things, that review recommended changes to sub-sector definitions and levy formulas to ensure they “remain fit for purpose”.
“It is evident that important recommendations have not been accepted in the IFM review,” Abood said. “For example, current financial advisers appear to be being charged for enforcement activities undertaken against past entities that in many cases are no longer even in the profession.
“This breaches one of the major principles of the IFM: that those who create the need for regulation should bear the primary cost. The moral hazard involved in this is of great concern and a fundamental flaw in the design that must be rectified.”
According to Minister for Financial Services Stephen Jones, though, advisers shouldn’t expect this flaw to be rectified anytime soon. At a Financial Services Council event in Sydney, Jones responded to an audience question about the apparent conflict between the Government’s affordable advice agenda and the increased ASIC levy by saying he would “look at it” but “[not] within the current round.”
“It’s just bandwidth, mate,” he added. “So many things we can deal with at any point in time.”
While Jones alluded to other reasons why the levy freeze wasn’t extended – it was implemented by the former Government and intended as a relief measure during the COVID-19 pandemic – the primary issue appeared to be the implementation roadmap for the Quality of Advice review. In other words, any measure aimed at addressing the potential imbalances in the industry funding model may have to wait until next year.
One wonders what the ASIC levy will look like by then.
