Treasurer Josh Frydenberg

Advisers will save around $4,000 in levies over the next two years as Treasurer Josh Frydenberg Monday morning announced “temporary and targeted” relief for the industry.

After ASIC estimated that advisers would need to pay a flat fee of $1,500 per license plus a graduated component of $3,138 per adviser this year – more than triple the original $934 fee in FY17/18 – the relief will now see levies pulled back to their FY18/19 level of $1,142 per adviser.

In total, retail advisers should save over $90 million in fees over the next two years.

According to Treasury, the relief measure will help mitigate both the effects of the pandemic and the disruption of reforms associated with the Hayne royal commission.

“The freeze in the per adviser levy will provide financial advisers with the certainty they need over the next two years to deal with the impacts of COVID-19 and further regulatory reforms making their way through the Parliament, including the introduction of a Single Disciplinary Body and a Compensation Scheme of Last Resort.”

Funding model review

Next year Treasury will also review the regulator’s industry funding model, which sees licensed entities pay for their own oversight, to ensure it remains fit for purpose “given structural changes taking place in the advice industry”.

ASIC chair Joe Longo actually let the cat out of the bag on Friday during a terse opening session at a PJC hearing into ASIC’s effectiveness, where liberal MP Bert van Manen pressed the regulator on whether it was telling government how badly the burgeoning levies were affecting advisers.

After ASIC’s head of operations Warren Day assured the MP that the government has been given regular updates on the industry’s struggles, Longo said:

“The other thing I would note, and I’m pretty sure this is correct, is that there is going to be a review of this cost recovery regime some time next year which I think will probably be led by Treasury.”

On top of the government’s external review of the industry funding model, ASIC announced in its corporate plan last week that it will set up its own internal unit to monitor how it operates, “with a focus on minimising regulatory costs for businesses“.

The focus on ASIC’s spending comes amidst a broader policy shift at ASIC, which moves from the ‘why not litigate’ footing adopted at the royal commission to a more accommodative and supportive role in helping the financial service system and its associated businesses recover from the pandemic.

ASIC’s new leadership team of Longo and deputy chair Sarah Court look set to embrace a thriftier mindset and temper some of the regulator’s legal machismo.

Piece of the puzzle