With the government due to announce its third budget tomorrow, the Financial Advice Association Australia (FAAA) has put together a wish list that includes six items it believes will have a positive impact on the financial future of Australians.
The list encompasses a fairer ASIC funding levy, managed costs for the Compensation Scheme of Last Resort, improved tax deductibility for financial advice, access to the ATO portal for financial advisers, increased support for adviser education, relief in exam fees, and a reversal of proposed changes to Reduced Input Tax Credits for advice fees.
FAAA CEO Sarah Abood emphasised that this list reflects the organisation’s desire for consumers to access high-quality, professional, and competitively priced financial advice that aligns with their best interests.
“The FAAA remains very concerned about the fast-increasing cost of the ASIC levy. The financial advice subsector was charged in total $47.6 million last financial year – more than any other sector including super funds, listed companies, and life insurers. The per-adviser amount almost tripled, to $2,818 per adviser in the last year. These rapidly increasing costs are a factor in the increasing cost of financial advice to consumers,” Abood said, stressing again the “unfairness” of a model that penalises compliant advisers for the actions of the non-compliant few.
Instead, she said that the costs of addressing fraudsters and unlicensed operators should be distributed across the entire financial sector rather than solely burdening the financial advice sub-sector.
On top of this, Abood stressed the urgent need for the government to prioritise fairness and improve the management of costs associated with the CSLR.
“The FAAA is calling for the retrospective impact of the CSLR on financial advisers to be resolved,” she said.
“The CSLR will be covering the cost of the Dixon Advisory failure although that entity was put into administration more than two years before the scheme was established. Government should ensure current compliant financial advisers are not paying for historical failures. The total cost of this single failure to financial advisers could be over $100 million, and our sector simply does not have the capacity to cover this cost, nor is it fair or reasonable that it should do so.
“In order to effectively manage the ongoing costs of the scheme, the government must ensure the groups that are responsible for these failures and their insurers are pursued to the full extent of their resources, before the broader profession is charged for compensation”.
Moreover, reiterating earlier calls, Abood said the FAAA is urgently asking the government to remove retrospectivity by covering historical claims based on the date the claim is made, not the date the claim is finalised.
“We are also calling on AFCA to make clear the timing and circumstances under which Dixon’s membership of AFCA will cease,” she said.
“In addition, the government should enhance the effectiveness of the scheme, and increase the confidence of the public in the financial system, by including MISs in the scope of failures covered.”
Regarding the push for financial advice to attain tax-deductible status, it’s an area the FAAA has long championed.
“This will go a long way toward making financial advice more accessible for more Australian families,” Abood said.
“Government should act to make the cost of financial advice provided by a professional financial adviser fully tax deductible to consumers. Such a concession could be effectively targeted to those with the most need, and budget costs managed, in a number of ways, such as by introducing the deduction with a capped amount (such as $3,000) that could be claimed in a single year.”
Ultimately, Abood said, “It is imperative that we reduce red tape and the cost of regulation in order to make financial advice more affordable”.
