ASIC’s discretionary power in levy calculation questioned: ‘It was the government’s decision’

According to Eugene Ardino, the current government has determined that the opportune moment had arrived to lift the freeze on the Australian Securities and Investments Commission (ASIC) levy previously implemented, thereby effectively sidelining the corporate regulator.

Speaking to ifa, the chief executive officer at Lifespan Financial Planning said that it’s probably important to point out that ASIC operates based on a predetermined metric for levy calculation, raising doubts about the extent of their discretionary power.

“The reason it was frozen, was a government decision,” Mr Ardino said.

“And the reason and the fact that the government has come out and said, ‘We’re going to stop the freeze’, well, again, that’s the government. So the people you have to look to are the government people who’ve decided that it’s now appropriate to effectively cause that ASIC levy to triple,” he explained.

He cautioned that by the time the actual levies are in six- or nine-months’ time, the cost could rise further.

“Historically, it’s what used to happen, estimate, the spend ended up often being higher than it had been budgeted for. And we ended up having to pay more.

“So that’s, that’s pretty disappointing. And I’m hoping that the government will rethink that, if not this year, in the future, because it’s just not sustainable to have. I mean, it’s gone up by over 250 odd per cent in its existence of what, five or six years,” Mr Ardino noted.

He also suggested that the cost of the ASIC levy should be shared by consumers.

“I think also, ASIC effectively is there to protect consumers. So I do feel it’s quite appropriate for the taxpayer to foot a lot of that bill,” he said.

“They’re essentially the ones that are benefiting from that oversight. So industry should pay a portion, I suppose.”

In its latest Cost Recovery Implementation Statement (CRIS) published last month, ASIC confirmed that to cover the cost of regulating licensees that provide personal advice to retail clients, which stood at an estimated $55.5 million in 2022–23, advisers will pay a minimum levy of $1,500 plus $3,217 per adviser.

Under the former government’s ASIC levy freeze, the costs charged to the sector amounted to $22.8 million. This meant that at the time, advisers were charged a minimum levy of $1,500 plus $1,142 per adviser.

A day earlier, in announcing the release of the final report on the review of the ASIC Industry Funding Model (IFM), Financial Services Minister Stephen Jones said the freeze would not be extended.

“The review also considered the temporary levy relief for personal financial advice licensees that was in place for 2020–21 and 2021–22. The temporary levy relief for this sub‑sector will not be extended further,” he said.

Responding to his announcement, the Financial Advice Association Australia said in a statement that it is “extremely concerned” to see the impact of the end of the freeze on the ASIC levy resulting in an almost tripling of the per-adviser cost.

“We call upon the government to urgently reconsider the removal of the freeze in light of the flaws in the model being used to calculate the levy, and the negative impact on Australian consumers who will ultimately bear the costs,” the CEO, Sarah Abood, said.

Mr Jones is yet to address the concerns.