ifa has learnt that advisers collectively are forwarding identical letters to their local MPs and senators, cautioning against the government’s mismanagement of advice legislation and regulation, with the correspondence, seen by ifa, believed to have been distributed to advisers by adviser networks for onward transmission to their parliamentary representatives.
The letter delineates “recent actions and proposed legislation” that, it asserts, contradict the government’s professed goals of enhancing the affordability and accessibility of financial advice, instead resulting in “significant cost increases for consumers and further restricting access to professional advice”.
These actions include the Compensation Scheme of Last Resort (CSLR) levy, to which the letter says: “Assistant Treasurer Stephen Jones appears indifferent”.
The letter details that projections suggest the CSLR levy will amount to $5,709, which, coupled with the ASIC levy of $2,818, imposes a total cost of over $8,500 on each adviser, compelling them, and ultimately their clients, to bear the financial burden for the transgressions of a major, defunct entity such as Dixon Advisory.
Moreover, it points out that the parent company of Dixon Advisory, Evans and Partners, earned over $174 million in revenue last financial year. Yet, advisers are being asked to foot the bill for their subsidiary’s failures.
“Most financial advisers like myself, are small business owners who prioritise their clients’ interests. Holding them accountable for the failures of large corporations like Dixon Advisory is unjust and unsustainable,” the letter reads.
Moving on to recent legislation, which was agreed to by the House of Representatives last week, the letter says that the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill appears to covertly restrict advice fee payments from superannuation, potentially impeding access to quality financial advice and raising costs, despite its professed goal of reducing red tape and promoting affordable advice.
“The amendments introduce substantial administrative burdens, requiring superannuation funds to rigorously assess the member’s justification for advice payments and the proportionality of fees. This subjective process duplicates AFSL responsibilities and increases costs for all members,” the letter further states.
“Both the Financial Advice Association Australia (FAAA) and Financial Services Council (FSC) have called for explicit changes to the provisions in the bill to ensure the regulatory burden on trustees and/or advisers does not increase, which is the opposite of what QAR lead Michelle Levy sought to achieve. The minister has dismissed these concerns without explaining the consumer protections these changes supposedly provide,” it continues.
The letter ends by imploring the Parliament to address the accessibility threats posed by the CSLR levy and the Treasury Laws Amendment Bill as a matter of urgency, adding that this is key to maintaining “affordable access to financial advice”.
ifa has yet to determine the origin of this letter, however, several groups have confirmed that they have seen it and support the initiative.
Speaking to ifa, Keith Cullen, managing director of WT Financial Group and a member of the Licensee Leadership Forum, confirmed that he had seen the letter.
“I am aware that it is circulating in the network, and I think it’s great that advisers are getting organised and they should be encouraged to get involved in the political process.”
ifa understands that the letter did not come from the FAAA, but the association is planning to launch its own campaign regarding the unjust CSLR cost being imposed on advisers.
Speaking at ifa’s Adviser Innovation Summit on Tuesday, the CEO of the FAAA, Sarah Abood, said, “It’s really important for us to make a stand on this”.
“This is something we’re angry about, and we have launched a member campaign, so for any members in the room, there’s a campaign. If you send a note to policy@faaa.au, we can include you in the campaign. It’s likely to start with engaging with your local member and letter writing and it will go on from there.
“I think it’s important that we, as a profession, get together and make sure this thing is put on a sustainable footing.”
