William Johns

The corporate regulator has blamed higher costs and the Hayne royal commission on a 26 per cent increase on estimates for the 2018-19 individual adviser levy.

ASIC’s Industry funding: summary of 2018-19 actual levies, published in December 2019, detailed the charge to licensees for regulating advisers who provide personal and retail advice at $1,142 per adviser, as opposed to the $907 per adviser estimate that was provided in ASIC’s June Cost Recovery Implementation Statement (CRIS).

Both charges also include an additional minimum $1,500 levy, which remains unchanged.

The total cost recovery amount for personal and retail advisers – the sector that covers most of the advice industry – ballooned from an estimated $25.031 million to a final figure of $33.028 million.

Speaking to Professional Planner, an ASIC representative attributed the increase to “higher regulatory costs than expected… including on enforcement action”.

“The variance between the forecast and actual levies for financial advisers… is mainly due to an increased focus on the financial advice sector as a result of the recommendations of the Financial Services Royal Commission,” the spokesperson continued.

ASIC was chastised by commissioner Hayne during the royal commission proceedings for using the question ‘how can this be resolved by agreement?’ as a starting point in resolving misconduct, instead of asking whether a court should determine the consequences of any contravention.

The public admonishment saw the corporate watchdog embrace its ‘why not litigate?’ policy with gusto – an activity which has trickled down into the adviser levy fees.

Always a risk

The higher levy comes as a blow for the advice industry after the $907 (per adviser) estimate looked set to deliver a slight discount to the $934 charged in 2017-18.

The 26 per cent hike is the first significant variance between the estimated and actual cost in the subsector since the government implemented its industry funding arrangement in 2017.

According to the regulator, the estimates are there to help businesses budget but are subject to change.

“The ASIC industry funding model was designed so that industry levies are set at the end of the year, after ASIC’s regulatory costs are known. This means there is always a risk that forecast levies will differ from actual levies,” the spokesperson said.

“Levies will also vary over time, as ASIC’s focus areas change based on the threats and harms in the market place.”