CPA Australia has joined the Financial Planning Association in urging the government to reconsider the efficacy of ASIC’s industry funding model, and recommended moving towards a partial cost recovery model that relieves the financial burden on practitioners.
In its pre-budget submission CPA outlined the danger of gouging industry participants, especially given revenues have been curtailed in many corners due to the pandemic.
“Firstly, many industry participants, such as insolvency practitioners, SMSF auditors and financial advisers, have had their 2018-19 fees due at the height of the crisis, as their business revenue has fallen significantly,” the submission states.
“Secondly, the ASIC funding model is directly impacting the supply of practitioners, with many practitioners exiting their industries as a result of the cost of regulation.”
The ASIC funding model is directly impacting the supply of practitioners in the industry, CPA says, by contributing to an already onerous regulatory cost. The heavier the burden, the more advisers leave the industry, which in turn increases the burden on the remaining advisers.
“As greater numbers of practitioners exit due to the impact of the pandemic, a smaller pool of participants remain to share ASIC’s costs, thereby exacerbating the problem of increasing regulatory costs,” the submission notes.
The call comes a week after the FPA decried the “unpredictable” costs associated with the model – costs which have increased exponentially since the model began.
“The levy per financial planner has increased from $934 in 2017-18 to approximately $2,000 in 2019-20,” FPA chief Dante De Gori said. “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.”
The latest levy for advisers rose to $2,426 for the year.
CPA’s recommendation that the government replace the full industry funding model with a partial model would require a corresponding increase in funding to ASIC, the submission noted.
