The summary of actual levies for the 2020 year revealed ASIC will charge a minimum levy of $1,500 per licensee that provides personal advice to retail clients, plus $2,426 per adviser — a significant rise on the $1,571 per adviser listed in the regulator’s cost recovery implementation statement in June 2020.
ASIC commissioner Danielle Press told a Senate estimates hearing on Thursday that there has been a 29 per cent rise year-on-year for the cost per adviser.
She added that the royal commission had resulted in increased action, running up costs, while a number of advisers had exited their industry. Those two factors have also combined with a “lag effect”.
“There is a lag effect in the industry funding model in that enforcement activity and cost is current this year. When we recover those enforcement costs, when we’re successful, they are then applied back to the levy in future years,” Ms Press told a Senate estimates hearing on Thursday.
“But there is a lag effect that we do understand is affecting advisers.
“Unfortunately though, the industry funding model — there is very little flexibility in what we can do to affect the one-year number.”
“Right, because the parameters for that are set by the government, not by ASIC,” Labor senator Jenny McAllister interjected.
“They’re set by legislation. That’s correct,” Ms Press answered.
Similarly, ASIC had told another parliamentary hearing the week prior that advisers will continue to pay heavy levies until costs can be recovered from the larger institutions. The timeline of enforcement actions against those organisations made it difficult to recover the money ahead of time, the regulator said.
But Liberal senator Slade Brockman stated he and his colleagues had been inundated by complaints from advisers.
“There’s a feeling in the advice industry that the banks and other large institutions that have left the financial advice industry effectively left the smaller players carrying the can and then they’ve seen their fees increase significantly,” Senator Brockman told ASIC deputy chair Karen Chester.
“Is there anything that ASIC is looking at that can ameliorate the increase?”
Ms Chester responded, “Unfortunately, the way the model works is it’s very difficult to carve one piece out to another. We are very cognisant of the issue, but the industry funding model is mechanical and it has very little flexibility in what we can do to make any changes.
“We will look to recover the costs of litigation that we are taking against the large institutions, when we’re successful in that litigation and that enforcement activity. That will then be applied to the smaller advice licensees in the future, but unfortunately, that time lag is a result of the model, not a result of anything we can actually do.”
Minister for Financial Services, Superannuation and the Digital Economy Jane Hume, however, rebutted the remarks from ASIC.
“This has been an area of the sector in particular that’s seen quite seismic change… structural change,” Ms Hume commented.
“But I think, most importantly, the industry funding model that is imposed does have some level of flexibility and the discretion by ASIC as well.”
She also noted the 10 largest licensees providing personal advice have contributed a “steady share” of around 20 per cent of the total levies since the funding model had been implemented.
There will be a rolling review of cost recovery arrangements of the Treasury portfolio by the Department of Finance later in the year.
“ASIC commissioner Danielle Press told a Senate estimates hearing on Thursday that there has been a 29 per cent rise year-on-year for the cost per adviser”.
ASIC, Ms Press do the bloody math. You are telling utter Lies, disgusting Lies !!!
ASIC you are totally incompetent and Corrupt.
Let me do the Math for you:
– 2017/2018 the first levy = $934 / Adviser.
– 2018/2019 second levy = $1,142 / Adviser = 22% increase
[b]- 2019/2020 third levy = $2,426 / Adviser = 112% INCREASSE from last year.
Or a total of 160% increase in just 3 years. [/b]
[b]But yeh Ms Press tells complete lies and says 29% year on year rise cost per adviser.
That would be $934 up 29% = $1,205 up 29% [u]= $1,554.[/u] [/b]
Is ASIC / Ms Press trying to refer to ASIC ESTIMATED Adviser fee that was $1571 ???? That would be close to the 29% year on year rise.
Is Ms Press unaware of the real ASIC Adviser fee = $2,426 / Adviser ???
Is Ms Press unable to do the Math ???
Is Ms Press telling utter Lies hoping no one will look ???
Disgusting Lies, Disgusting Incompetence. Disgusting Corruption is ASIC.
Also ASIC Life Insurance Levy went from $310 pa per AFSL up 114% to $665 then up another 80% to 1,196 pa.
So beside the LIF disaster killing any Adviser incentive to try to write Life Insurance business. LIF has caused premiums to rise in 3 years between 60% and 100% so clients can’t afford Life Premiums.
[b]Then ASIC have the gall to increase their levy by almost 4 TIMES in just 3 years. [/b]
Ahem, as a relatively new registered adviser (I’ve been registered for two years but trying to startup my financial planning as a part-time sole trader) that hasn’t yet provided personal financial advice to ANY paying client, the bit about “ASIC will charge a minimum levy of $1,500 per licensee that [b]provides[/b] personal advice to retail clients, plus $2,426 per adviser” is what is broken with this “user pays” system. I’m paying $4,000 pa to ASIC, $1,200 pm to my AFSL just to stay ‘registered’ and be able of offer to provide advice. That’s before I actually start spending time, effort and money on seeing clients and preparing an SOA.
I submitted my opinion that there should be a small fee charged per SOA/ROA (eg $20) to provide the funding on a truly ‘user pays’ system, but the response I got was that it would be too hard, as ASIC only looks at the number of registered advisers per AFSL when working out the fees. If a corner store can manage to charge 10% GST on every $1 and $2 sale and send it to the ATO, surely there could be a simple system to financial advisers to just send ASIC $20 every time they provide a client with an SOA or ROA? And if ASIC ends up getting too much or too little money, they can just change the amount up or down a bit (say $15 or $25) so that costs are recovered over time.
The whole thing smacks of “we don’t care” on the part of ASIC. Yet at the same time the bemoan that fact that advisers can’t offer affordable ‘scoped advice’ – yet look at all the ‘know your client’ requirements, costs and red tape that make offering affordable advice impossible.
“All care & no responsibility”? More like no care & no responsibility.
If this was a ‘client remediation’ issue you can be damned certain the regulator would be saying, effectively, get it sorted out to the clients advantage, NOW.