Advisers are set to benefit, albeit slightly, from a reduction in levies for the 2018-19 financial year, according to the draft cost recovery implementation statement (CRIS) published by the regulator.
Released on April 10, the CRIS puts the budgeted cost recovery amount (after adjustments) to regulate licensees that provide personal advice to retail clients at $25.031 million. An accompanying ‘indicative levies summary’ puts the levy amount at a flat fee of $1500 per licensee, plus $907 per adviser.
The figure is slightly lower than the $25.634 million final cost to regulate typical financial advisers in 2017-18, which resulted in the same minimum levy of $1500 and a slightly higher $934 per adviser.
The $27 saving per adviser is not set in stone, however. According to the Australian Securities and Investment Commission the CRIS is a “forecast”, and the indicative levies are published for regulated entities to “help them plan”.
Industry participants are invited to provide feedback up until April 26, after which ASIC will prepare for the final CRIS to be delivered in May.
Invoices for ASIC’s 2017-18 adviser levies were issued in January this year and were due for payment on March 15.
According to ASIC’s annual dashboard report for the 2017-18 year, the lion’s share of costs recovered through levies in the financial advice sector has been allocated to expenses relating to enforcement ($5.706m), property and corporate services ($4.214m) and supervision and surveillance ($3.974m).
The same three areas have been flagged for the highest costs in the 2018—19 financial year, according to the CRIS.
In 2017-18, $0.191m of ASIC’s reported spend in the financial advice sector went towards education, according to the annual dashboard report.
Passing on the cost
The levy is part of a government funding arrangement that became law in 2017, after a recommendation from the 2014 Murray Financial System Inquiry that government recover the costs of regulatory activities “directly from industry participants through fees and levies calibrated to reflect the cost of regulating different industry sectors”.
Each year, ASIC issues invoices to recover the bulk of its costs from licensed entities.
This year, 2019, marks the first in which the regulator will recover most of its costs from the regulated industries, including the insurance, market infrastructure, corporate, investment management and superannuation sectors.
Between July and September last year, all regulated entities were asked to visit an ASIC portal and validate their business metrics, which were then used to calculate the levy amount.
As reported in January, most financial advice licensees are passing on the cost of the levies to their advisers, although some have facilitated payment plans to soften the burden.