Publicly available tender documents suggest ASIC awarded at least $90,000 in expert witness contracts to advice firms in 2020, and more than $200,000 in 2019.
Of tender documents awarded in 2020, $73,507 went to Queensland advice practice Tupicoffs, while $20,075 was awarded to Asset Class Financial Planning.
In 2019, former ipac WA chief executive Patrick Canion was awarded $82,280 in expert witness contracts by the regulator, while Tupicoffs again received $121,096.
The news comes following an increase in ASIC supervisory levies for the advice sector of more than 160 per cent over the past two years, with the regulator having revised up its levies for the 2020 financial year by more than 60 per cent between June and November last year.
Advice licensees will be charged a base rate of $1,500 in levies plus $2,426 per adviser that provides personal advice to retail clients to cover ASIC’s costs for the 2020 year, despite estimates released in June that the levies would amount to $1,571 per adviser.
The regulator’s annual report for 2020 reveals its legal and forensic expenses bill increased by more than 40 per cent year-on-year, with approximately $46.4 million spent on legal costs for the financial year compared with $32.4 million in the 2019 year.
ASIC’s total costs paid for goods and services also increased to around $139 million in the 2020 year, up from $132.5 million in 2019.
Financial planning academic and former AIOFP chair Adrian Raftery said advisers may be rightfully concerned to discover some firms were profiting from skyrocketing costs at the regulator that were being passed back to the broader industry.
“To earn $442,379 as an adviser — based on an average fee of $2,800 — you would need to write 158 SOAs. However, it appears you can earn that from ASIC by only writing four or so expert reports,” Dr Raftery said, referring to the total amounts that one firm had earned from expert witness services in the past four years.
“ASIC [doesn’t] care about the costs; it’s funded by the advisers retrospectively anyway through their annual levy.”
