While supporting ASIC’s efforts to deter misconduct in the financial advice profession and foster consumer confidence, the Association of Financial Advisers (AFA) has raised concerns about the ASIC Supervisory Cost Recovery Levy Bill (the Bill) which details an industry funding model designed to recoup the cost of monitoring and remediating poor advisers.
“ASIC’s efforts to improve consumer confidence are to be commended,” said AFA CEO Philip Kewin. “It is vital that Australians have trust and confidence in the profession when seeking financial advice.”
The AFA is, however, very concerned that the industry funding model will result in costs being passed on to all advisers, even those who are behaving professionally and ethically, making it even more expensive for them to provide advice to ordinary Australians.
“There are currently no provisions to provide discounts for those advisers who are doing the right thing,” Mr Kewin said. “This seems unfair, particularly when all advisers have already had to bear a raft of costs, including increased Professional Indemnity insurance premiums and costs associated with upgrading Fee Disclosure Statements and incorporating opt-in arrangements.”
In its submission to Treasury on the Bill, the AFA said any further increase in the cost of providing advice is likely to put quality financial advice out of reach of those who need it most. “Financial advice should not just be for the wealthy and this model should not unintentionally facilitate that outcome.”
The AFA is also concerned that unless costs are capped, there is no provision to contain the costs passed on to advisers.
“The AFA recognises and is an active participant in measures to ensure the highest professional standards are maintained to protect the consumer,” Mr Kewin said, “but measures should be practical, affordable and reward excellence.”
The AFA is calling for discounts for advisers doing the right thing, capping of increased costs and a minimum five-year review.
