The review of the industry funding model comes five years after the cost recovery scheme commenced in 2017 to support the regulator’s supervision of the financial services sector, including financial advice, via levies. The previous Coalition Government said that Treasury would undertake the review this year.
The Financial Planning Association (FPA) says this coming January could see planners “slugged with a substantially increased” ASIC levy.
“That’s because the current ‘freeze’ at 2018/19 levels is about to expire,” the FPA says. “For the last four years, we have been calling on the Government to undertake a review of the ASIC industry funding model due to the unfair outcomes the model has had on the financial planning profession.”
The FPA says it welcomed the previous Government’s freeze to the advice levy, which recognised that financial planners should not be asked to cover the cost for regulating past misconduct and court cases against the banks and large licensees that are no longer involved in providing financial advice.
The peak body says it estimated the levy per adviser would be about $3138 – almost three times the actual levy paid – had there not been a freeze for the last financial year.
“The FPA is very concerned that the delay in the review could mean the expiry of the freeze for this financial year,” the peak body said.
“Therefore, we believe it is imperative that the Government prioritise the review, and reimplement the freeze until it is completed. Recommendations should be implemented to ensure financial planners are only levied for the work that ASIC undertakes on the current profession.”
The Association of Financial Advisers (AFA) says it is pleased a review of the funding model is underway but has similarly voiced concerns about the end to the freeze in levy for the profession.
“We are very conscious that the relief that was provided to financial advisers in August last year related to the 2020/21 and 2021/22 years, which have now concluded,” CEO Phil Anderson said.
“We are therefore concerned that the combination of a significant decline in financial adviser numbers and the commencement of the operations of the Financial Services and Credit Panel is likely to result in a large increase in the cost of the ASIC Funding Levy for financial advisers in the 2022/23 year.
“And we trust that this will be considered in terms of the timing of this review and the recommendations that are made.”
Mr Anderson says the Government has got the review’s terms of reference right in reflecting a number of issues that were central to the underlying problems that led to the levy relief being provided by the previous Coalition government.
“This addresses issues like the appropriateness of recovering significant amounts for enforcement activity, particularly when the entities that drove that activity are no longer in the sector,” Mr Anderson said.
He says the terms of reference should allow the review to get to the “core of the problems” that the financial advice sector has complained about.
Click here for more details of the review.