The fee hike, published by ASIC last Thursday, 4 March, represents an increase of 160 per cent over two years for financial advisers. Meanwhile, the number of financial advisers has fallen from around 25,200 in 2017–18 to approximately 21,200 now.
The total cost levied by ASIC is now $1,500 per retail advice licence, plus an additional $2,426 per authorised adviser under the licence. It is understood this means a sole practitioner holding a limited licence can expect to be hit with a $3,926 bill from ASIC within weeks.
This comes after previous recommendations for changes to ASIC’s full cost recovery model, with its lasting effect on the supply of SMSF auditors and financial planners.
Chartered Accountants Australia and New Zealand, SMSF Association, CPA Australia, Financial Planning Association of Australia and the Institute of Public Accountants say the steep increase highlights serious issues with the funding model and will hasten the exodus of advisers from the industry.
“The government should immediately review the industry funding model and should reduce or remove the latest industry funding levy increase,” CA ANZ financial advice leader Bronny Speed said.
“ASIC should be properly funded from consolidated revenue to undertake its functions and the industry funding levy must reflect the cost of regulation and not fund other budgetary measures.”
The group stated that it is concerned the model doesn’t account for changing industry dynamics, contributing to the decline in financial adviser numbers.
The remaining participants are commonly left to shoulder a disproportionate cost burden and the group noted ASIC’s preliminary cost estimates are often inaccurate and hence difficult to budget for. Penalties and fines are also diverted to consolidated revenue rather than offsetting ASIC’s costs.
The industry bodies noted that the industry funding model has not changed despite major shifts in the financial advice sector.
“For example, banks have largely ceased operating financial advice businesses. Yet ASIC’s budget to oversee financial advisers has increased from $25.6 million in 2017–18 to more than $56 million in 2019–20. This is largely due to supervision and remediation of historic deficiencies in the banks,” the group stated.
“Declining adviser numbers means that remaining participants must shoulder a heavier proportion of the total cost. This is impacting the viability of remaining businesses. Ultimately, this has flow-on effects for competition and the accessibility and affordability of financial advice.”
With ASIC providing an estimate for each year’s industry levy approximately six months before the final amounts are invoiced, Ms Speed said experience has shown that these are often inaccurate.
“This makes it difficult for financial advice businesses to budget for their operating costs,” Ms Speed said.
“Fines and penalties go into consolidated revenue. Retaining these would help offset ASIC’s operating costs and put a stop to the existing cycle of levy increases.”
The industry bodies are calling for action in response to the fee increase, with the government urged to immediately review the industry funding model.
“The government should also reduce or remove the latest industry funding levy increase,” the group stated.
“ASIC should be properly funded from consolidated revenue to undertake its functions and ASIC’s industry funding levy must reflect the cost of regulation and not fund other budgetary measures.”
I am one of the ” ]a sole practitioner holding a limited licence can expect to be hit with a $3,926 bill from ASIC” and I just got my bill!!! and I have just hit rock bottom in my motivation to keep going in this industry. I’ve had no income from this industry and yet the fee from ASIC has arrived. And for what service from them. Doesn’t fee for service apply to ASIC???
[b]ASIC[/b] should be funded by the federal budget and not by the industry, especially by the small player. Otherwise, why we need to pay tax? pay pay the levy for the service we use, right?
It’s clear ASIC do not want any accountants to be authorised reps. That’s probably their solution to the mess they created with limited advice for accountants, price them out of the industry then they don’t have to deal with the fact that many clients have been left with no where to get simple advice
Yep but ASIC actually don’t want any Real Advisers. They are pricing and regulating to death the Adviser industry.
ASIC only want Intra Fund Advice, Vertically owned Industry Super Advisers selling only Industry Super. All paid for by hidden commissions charged to All Industry Super members when very few members get Advice.
ASIC are totally corrupted by their Regulatory Capture Corruption and unwavering support of all things Industry Super whilst killing off All Real Advisers.
Let’s be clear CPA Australia saying anything now is too late the horse has already bolted. CPA has never advocated for it’s members with limited licences because they were too busy with their own doomed Licensing model CPA Advice that lost millions. CPA Advice should have been on the front foot from the very beginning telling ASIC that if you want Accountants to have a Limited Licence you are going to need to differentiate them from advisers with a full license. Instead we have been totally forgotten. We have the same CPD requirements, we have been required to sit an exam of which a lot was not relevant and we pay the same fees as an adviser with a full licence. CPA Australia pop their heads up every now and then and say something but their hearts are not really in it. Absolutely zero support for members with a Limited Licence, no advocacy from the beginning and no resources.
Still waiting for my fee disclosure statement telling me what services I’m receiving as part of paying this levy. Can I opt out???
This is a consequence of a broken industry.
The remaining advisers are being ruined by poor governance at all levels.
This is J
Just another example
Are ASIC going to investigate themselves for Fee for NO SERVICE!!!
On the basis that tax payers pay for the:
* Police to monitor and enforce society’s rules; and
* ATO to monitor and enforce payment of taxes,
why do advisers have to pay the enforcers of rules for the industry?
I don’t believe that this is fair or reasonable and that ASIC should be a tax payer funded. We cannot afford the levy and the 60% rise is price gouging at its worst!!!