Phil Anderson (left) and Ben Marshan

Two major industry associations hope the terms of reference for the ASIC Industry Funding Model (IFM) will help address the disproportionate burden currently placed on the financial advice industry.

Released on Monday night by Treasury, the terms of reference will focus on the types of costs and nature of ASIC’s activities that are recovered from industry, how those costs are recovered, and who they are recovered from.

The review, which will include the Prime Minister’s department and cabinet, will also address how ASIC allocates costs to subsectors, as well as changes in levy amounts since the start of the IFM with a focus on those that have faced significant increases (i.e. financial advice).

Financial Planning Association head of policy Ben Marshan says the FPA has been calling on the government to undertake a post implementation review on the ASIC industry funding model for the last four years due to the disproportionate outcomes the model has on the profession.

“We welcomed the freeze to the advice levy implemented by the previous government for the last two financial years,” he told Professional Planner. “Particularly given professional financial planners were being asked to cover the cost for regulating the misconduct and court cases against the banks and large licensees which are no longer involved in advice.”

The review will not assess or make recommendations on the regulator’s role, performance,  appropriate level of funding, how it allocates its resources, and other registry fees outside the scope of the IFM.

ASIC announced last year it was working with treasury on the review with the intention it would take place sometime this year.

Who’s paying for what?

One of the burning questions the review will tackle is how cost recovery will be spread out over fewer advisers.

This was an issue that came into play when ASIC announced a much higher levy only for the government to freeze it to FY19 levels later.

Association of Financial Advisers chief executive Phil Anderson says adviser numbers have declined substantially and will continue to do so and this causes concern for FY23.

“If this review is not completed in time to fix that, then we might be looking at a particularly high charge that we’re all concerned about.”

Marshan likewise says the FPA is concerned the delay in the review will mean the expiration of the freeze for this financial year.

“It is imperative that the Government reimplement the freeze until the review is conducted and the recommendations are implemented to ensure financial planners are only levied for work ASIC undertakes on the current profession.”