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
The minister for superannuation, financial services and the digital economy, Jane Hume, said the industry funding model has been a key concern for advisers.
“In the many conversations I have had with advisers, the cost pressure from the ASIC levies has been one of the issues that has worried them most.”
Hume noted an escalating need for consumer support during the pandemic, and said the relief is in line with the government’s broader program to cut red tape and “improve regulatory alignment” for advisers.
Leading advice associations applauded the relief measure and the review’s announcement, and took credit for bringing the issue to parliament.
“This review will be a critical piece of the puzzle in making financial advice more affordable for all Australians as it starts with making financial planning more affordable to practice,” said Financial Planning Association CEO Dante De Gori.
Association of Financial Advisers national president Michael Nowak said it was unjustifiable to ask advisers to stomach a trebling of the levy in the midst of a “tsunami” of reforms.
“This is a significant first step in starting to address the practical impact of the reforms on the ability of financial advisers to offer everyday Australians sound financial advice to give them financial security and independence,” Nowak said.
One wonders where the recent NAB fine of over $18 million has gone and the huge fines paid by Westpac, why does the small player keep copping it in the neck while ASIC are awash with cash?