The Financial Planning Association has called on the Federal Government to freeze the ASIC levy for another year and broaden the scope of the compensation scheme of last resort (CSLR).
In a pre-budget submission to Treasury, the association stated these two issues are of particular importance and has continued to prioritise them during discussions with the government.
Levy freeze
The FPA called on the Government to freeze the ASIC industry levy for a further 12 months to ensure cost certainty for the sector during FY23 while Treasury reviews ASIC’s Industry Funding Model.
Treasury outlined the terms of reference of the ASIC IFM review in early August before commencing the consultation in late September.
The review will include the Prime Minister’s department and cabinet, and address how ASIC allocates costs to subsectors.
ASIC stated the review would have regard to the frozen advice levy which the former Treasurer announced last August after industry blowback from rising costs earlier that year.
The FPA said the freeze for financial planners should be extended to all industry sector participants who have been adversely affected by inexplicably significant ASIC levy increases.
“The current freeze has recognised the negative impact that ongoing significant ASIC industry fee increases have had on the financial services sector,” the FPA submission stated. “We acknowledge and appreciate the Government’s role to date in trying to control these spiralling increases for this sector.”
It added the industry is full of practitioners that are sole traders or work in smaller practices that do not have the flexibility to absorb additional regulatory costs.
“To provide certainty to the profession and provide adequate notice of any change, which may require planning for business models to adapt, the review should be completed prior to the expiration of the ASIC levy freeze.”
Broader scheme
The CSLR would place a levy on advisers to provide compensation to victims of financial misconduct. The bill was tabled in September after failing to pass before the Federal election in May.
Labor wanted managed investment schemes included in the bill, but that change is not included in the current iteration the party has introduced since winning government.
The FPA stated the bill is too narrow in scope, provides inadequate coverage for consumers, and doesn’t seek to address some of the underlying causes of unpaid determinations, such as appropriate professional indemnity insurance.
“We believe the Government should amend the proposed legislation to establish the scheme so that its design reflects a broader base that includes all participants in the financial services industry,” the FPA submission stated.
It also suggested to broaden the scheme to include the entirely of the jurisdiction of AFCA.
“Such amendments would ensure equity for industry and consumers as well as long-term sustainability for the scheme.”
