Seeking certainty for financial planners in their cost planning, the Financial Planning Association of Australia (FPA) has called for “urgent and immediate” continuation of the ASIC industry levy freeze and a fairer approach to costs.
In a statement issued on Tuesday, the FPA explained that the 2022–23 financial year could potentially see a big increase in the ASIC fees paid by financial planners.
The fee level has been frozen in recent years, but the FPA fears that freeze could be about to end.
Namely, in late August last year, the then treasurer Josh Frydenberg announced “temporary and targeted relief” for financial advisers. Among other things, this announcement saw ASIC levies charged for personal advice to retail clients restored to their 2018–19 level of $1,142 per adviser.
“The sub-sector as a whole will pay an estimated $46 million less in ASIC levies in 2020–21 alone, with further savings flowing in 2021–22,” Mr Frydenberg said at the time.
The FPA was quick to applaud the government’s announcement, noting the news would provide some certainty and stability to financial planners.
“This is a significant milestone for the FPA and our members, as we have been calling for a review of the flawed model since it was first proposed and then introduced three years ago,” the former CEO of the FPA, Dante De Gori, said.
Earlier this month, the Labor government confirmed it has commenced a review of the ASIC funding model, something the previous government flagged last year, but the FPA has warned that “time is running out”.
Namely, the association’s chief concern is that any changes that are agreed may not be implemented in time to impact the current financial year.
“Making financial advice more affordable for all Australians starts with making financial planning more affordable to practice,” FPA chief executive officer, Sarah Abood, said on Tuesday.
“There are activities that we’re aware ASIC undertakes that have nothing to do with financial planners yet are funded by financial planners in the current model. The government has had to intervene twice in the past five years because the model isn’t working as intended,” Ms Abood noted.
“It is important that any year-on-year increases better reflect the capacity of the financial planning profession.”
The association has also recommended the creation and application of retrospective regulations to directly charge the six large licensees at the time (AMP, Macquarie, ANZ, CBA, NAB, and Westpac) under a separate and specific levy for the cost of ASIC’s ongoing oversight of their remediation programs and litigation.
Ms Abood said it is unclear whether the corporate regulator is obligated under legislation or regulations to recover the cost of litigation and investigations relating to court action in the industry levy.
“Consideration should be given to excluding these costs from the levy where these matters are ongoing, until the litigation proceedings are complete and the matter has been determined by the court,” she said.
“This will make it clear whether ASIC has achieved a successful outcome in relation to the litigation, and therefore whether costs will or will not be recovered from the entity subject to litigation investigation and proceedings.
“This will alleviate the inequitable upward pressure on the levy paid by participants not subject to this enforcement activity.”
