The government has released a proposal paper and draft legislation of the CSLR – a scheme to meet the cost of unpaid AFCA determinations that arise as a result of a licensee being unable to pay or refusing to pay – which outlines that financial advisers will be slugged with a huge sum of the total levy cost alongside other sectors like credit providers, credit intermediaries and security dealers.
The proposal paper states that of the total levy cost in the first year, $16,024,155, the financial advice sector would be forced to pay $12,271,933, $7,447,180 (of $9,724,155 in total) the second year and an ongoing fee of $6,170,774 (of $8,057,489 in total) after four years.
“The $12 million is in the first year only and includes the set-up cost. This is a large sum of money being picked up by the financial advice sector at a time when they are already under significant cost pressure” AFA acting chief executive and general manager, Phil Anderson, told ifa on Friday.
“To us it simply seems unreasonable that financial advisers should pick up such a large percentage of the costs of this scheme.
“The scheme provides increased confidence for consumers and should therefore work to the benefit of all sectors of the financial services and banking industries and should be funded on a broad basis.”
Adding to that, managed investment schemes have been excluded from the draft legislation that would suggest that if a managed fund fails, the client would only be compensated if they take action against an adviser who recommended the product.
The AFA previously agreed to the introduction of a CSLR, however the association insists that support was on the basis that “financial advisers would not be expected to pick up the cost of product failures.”
“We are very concerned about the cost of this new scheme and the potential risk in the event of a black swan product failure,” AFA said in a statement.
Submissions on the draft legislation can be made to Treasury and close on 13 August.
At this point I really cannot tell who is worse???
Shorten – Frydenberg – Hume – or Kelly ODwyer? INCREDIBLE!!!!!
First they decimate my income by robbing me of absolutely non-conflicted trail commissions, then they impose a regulatory levy that I get absolutely no benefit from, now they are going to make me pay again for the sins of the FSC members who are responsible for product failures! Again because my PII premiums were hiked back when the GFC happened (not my fault).
Absolutely insane.
Anyone voting LNP next time?
Just the big banks…
NO CHANCE!!! NOT NOW, NOT EVER. NOT WHILE FRYDENBERG IS IN OFFICE.
no I’m not paying it ok
“To us it simply seems [b]unreasonable[/b][i][/i] that financial advisers should pick up such a large percentage of the costs of this scheme.”
Unreasonable doesn’t even scratch the surface Phil…its despicable, evil and clearly a continued focus by Josh Frydenberg to drive advisers out. I’m done. I WILL NEVER vote for the LNP while this piece of work is in office.
For Frydenberg to hit us up for their actions again is unacceptable. We are not the problem you mongrel….your banking mates and the industry superfunds are! I am NOT paying this. I will be out by the time this bill comes around.
And some of our colleagues believe the Labor Party would be worse for financial advisers. HOW !!! This is how a Coalition Govt repays all those SME advisers who have contributed over many years behind the scenes of the Liberal Party as organizers, fund raisers and purveyors of how-to-vote cards. All the way back to the 1975 Bass by-election. Its time to wake up boys-Frydenberg IS NOT YOUR MATE!
Most of my overheads have nothing to do with actually providing advice these days. Mainly admin & insurance on-costs. This Fed Govt has absolutely no clue.
AFCA says 99% of complaints are not from advisers. 1% of $16M is $160k. Apply that across 2000+ AFSL’s would be peanuts for clarity. Product issuers are the problem with their failed products causing these claims. That and criminals that ASIC has failed to shut down. Proceeds of crime should be the war chest ASIC are aiming for, not proceeds of businesses who are doing nothing wrong. However that wouldn’t hep Josh get his mates back in the game via robo would it?
This would be the most sensible way of allocating the cost…
Just more cost and more compliance, what next. Will advisers now pay the clients and the government to say in the business.
FRYDENBERG DOUBLE TAXATION OF ADVISERS EVER INCREASING.
FRYDENBERG HAS TO GO !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
This industry just gets better and better. Its easy to see why the banks and AMP divested their advice firms. The institutions that caused this are the only ones not paying, wouldn’t want the exec bonus’ or shareholders to suffer would we, no lets slog the people who actually do the right thing. What an absolute joke!!
AMP didn’t divest their advice arm, they’d prefer just to destroy it from within.
AMP would like to create a separate company with their advice arm and would exit advice if they could find a buyer. The banks will back in 5 years with a general advice model on the basis that there is an “unmet demand” for the service given the 5 financial planners who are left are too busy to look after anyone and are charging $100k for an upfront fee.
So a $26M bill to be picked up by ~18,000 advisers over the next three years. Another $1450 each. Wonderful.
On top of an ASIC levy (that has no cap – and no scrutiny), Tax practitioner ‘membership’ that is merely another tax, and increased regulation on the way.