Accountants providing superannuation advice under limited licenses will continue to be charged the full adviser levy after ASIC rejected a plea from Chartered Accountants Australia and New Zealand (CA ANZ) to reduce the fees because they have a different business model.
In a submission to ASIC relating to its Cost Recovery Implementation Statement (CRIS) – which outlines the estimated levies for licensed providers – CA ANZ complained about the cost “both financial and emotional, in dealing with additional red tape as a result of the removal of the accountant’s exemption”.
ASIC’s indicative levy cost for the 2018/19 FY – which after a three-month consultation period remains a flat fee of $1500 plus $907 per adviser – will be especially harsh on small accountancy businesses according to CA ANZ.
“Members who have limited licenses are finding these costs particularly onerous and many are looking to exit this industry,” the submission states, adding that increased education requirements were also a “considerable burden to shoulder”.
CA ANZ senior policy adviser Bronny speed says the problem is that limited license providers are paying a full-time cost for a part-time commitment.
“Our submission asked for an understanding that people with limited licences often had only ten per cent of their business related to licensing activities,” Speed tells Professional Planner.
ASIC acknowledged the call-out in the ‘stakeholder engagement’ section of the final CRIS release, noting a request that “the levy for AFS licensees that provide personal advice should not apply to accountants with limited authorisations”.
The regulator responded by saying was the government had already completed industry consultation on the industry funding model and any amendments “are a matter for government policy and will require legislative change”.
“This CRIS is focused on how ASIC will implement the industry funding model for our regulatory activities,” the statement added.
The CA ANZ submission included 14 notes from disgruntled members, one who said: “I am still very confused as to why I am paying a ‘financial adviser’ fee, when as far as I’m concerned I am not and cannot call myself a financial adviser. I don’t provide any financial advice and merely talk to my clients generally about superannuation matters as I have always done”.
Another noted that in order to provide clients with superannuation advice they needed to pay a licence fee, insurance premium, training costs plus the ASIC levy, which totalled $5634.
“I earned $1200 last year for providing advice to my clients, at a loss of $4434,” the note continued, before suggesting that the ASIC levy should be based on the provider’s income from financial advice.
CA ANZ put forward several options for an amendment to the levy determination.
“A reduction in these fees could be achieved by waiving the fixed levy, reducing the per adviser levy or charging a fee aligned with revenue,” the submission stated. “CA ANZ would be pleased to discuss how ASIC could achieve the goal of retaining accountants in superannuation through the development of an appropriate fee structure.”
Despite knocking back the request, ASIC did mention that “from time to time” it worked with the government review the industry funding model. “The submissions we have received on the CRIS will help inform this process,” the regulator added.