The Financial Planning Association has called for a review of ASIC’s adviser levy as part of six recommendations in its budget submission for 2020-21 that are aimed at reducing the cost to practice for advisers.
The annual ASIC levy amount is too unpredictable, FPA CEO Dante De Gori says, which makes it tough for advisers to plan the payment effectively.
“The levy amount each year has proved to be unpredictable, which makes it practically impossible for a financial planner to effectively budget for this business cost,” De Gori says.
ASIC predicted the levy per adviser would be $907 for the 2018-19 financial year, yet the eventual bill was $1,142 – a 26 per cent disparity. Further, the FPA says, the $1,571 ASIC estimates for the 2019-20 financial year is likely to be closer to $2,000.
The association is lobbying the government to review how the industry-funded regulatory model is working in the advice sector, especially considering the steep rise in costs which is set to increase with a shrinking adviser cohort footing the bill.
Over the 2019-20 financial year 3,100 adviser left the industry, the FPA notes.
“The levy per financial planner has increased from $934 in 2017-18 to approximately $2,000 in 2019-20,” De Gori says. “In three years of operation, the levy for financial planners will likely have more than doubled and there is no indication that increases of this scale will cease for 2020-21 or future years.”
“As a first step in addressing these twin challenges of predictability and dramatic levy increases the government should undertake to review the ASIC industry levy,” De Gori said. “As it has been three years since the levy was first introduced, it would be an appropriate time to review its implementation and impact on the financial services sector.”