Responding to questions on notice from Western Australian Liberal senator Slade Brockman, ASIC said the increase in the 2019-20 levy for the advice industry, which was revised up by more than 60 per cent between June and November last year, had been “primarily due to the increase in enforcement activity in this sector following the Financial Services Royal Commission”.
The response was received just prior to the regulator releasing its most recent estimates for the 2020-21 levy, which have seen another 30 per cent increase in costs attributed to the sector and calls from industry bodies for ASIC’s funding model to be urgently addressed.
In a further question, Senator Brockman asked if the advice sector had been charged for the case ASIC took to the High Court around Westpac call centre staff being found to have given personal, rather than general, advice to customers over the phone.
“Given that this issue related to super funds that were operating on a general advice model, did financial advisers who provided personal advice to retail clients end up paying any of the costs of that action?” he asked.
In its response, ASIC said both the super and advice sectors had been charged for the court costs in the case.
“Under the ASIC industry funding model (IFM), the cost of enforcement matters is attributed to industry subsectors based on the effort allocation for each matter,” the regulator said.
“The guiding principle under the IFM is to allocate costs for each enforcement matter based on the sector(s) or subsector(s) in which the misconduct occurred (i.e. the reason the case is being investigated).
“Therefore, where the issues in a particular enforcement matter involve multiple industry sectors or subsectors, the costs are apportioned across the relevant sectors/sub-sectors.”
The regulator said actions related to unlicensed conduct in the advice sector were “in the interests of the licensed participants in that sector, because it maintains integrity and trust in the licensed sector and deters competition from unlicensed and unregulated competitors”.
“Where ASIC is successful in court, any costs awarded and paid to ASIC will be credited to the relevant subsector(s), with the levy for those subsectors reduced accordingly,” ASIC said.
“There is likely to be a delay between when costs are incurred and when costs are recovered, which means levies for one financial year will include ASIC’s enforcement costs, but with any crediting of costs likely to occur in another financial year.”
With penalties in the Westpac case to be determined this month, ASIC said it would soon be “in a position to pursue recovery of costs of the litigation”.
This is a failure of the Financial Planning Association to properly Advocate for Advisers. Too busy trying to represent the Barefoot Investor, AwareSuper, Advisers, and the Call Centre for Hesta Super. They’re sending a mix message trying to keep all parties happy. Advisers made up 1% of complaints to AFCA and now this and proper representation would go to town on these facts….. I would encourage any FPA member to leave the FPA, as it’s the only way we can now reduce Red Tape, and an over bearing compliance regime. Please do not renew FPA membership.
A disgraceful, double-standard and conflicted organisation is all ASIC and the grubs that run it, are. I couldn’t have less respect for an organisation that I do, them.
Make Westpac pay!
So the good honest advisers are having to fork out their hard earned to fund the investigation of the likes of Melissa Caddick.
So not only are we paying for the Westpac call centre debacle, we are paying for the unlicensed sector. I guess this means the decent licensed advisers are having to fund the very costly investigation of people such as Melissa Caddick who never paid any fees in the first place. Who are the mugs here?
The problem here is that even when ASIC recover costs and receive the penalties, which run into the tens-of-millions, all of this money will be sucked up in the next round of Levy increases and never actually credited back to the industry. No accountability, reconciliation or onus on ASIC! No wonder the government loves this dog called ASIC
Westpac should pay the next year’s ASIC levy.
No wonder ASIC and the Government were keen to move to the why not litigate model. The Government doesn’t underwrite it, we do. If they lose the case, bad luck to the remaining advisers. If they win the case, we might see our money returned in a few years time (I say might, because how will we ever know).
It sounds like Rob Sitch, Santo Cilauro and Tom Gleisner came up with it.
Easy fix. If the litigation is against a company with turnover of say $500m or more, they need to underwrite the litigation and then if they win the case it comes out of Government’s consolidated revenue.
Apparently paid into consolidated revenue to be used elsewhere.
That is the worst funding model I’ve ever seen. It is just like how the Cowboy operations they are trying to shut down pay themselves, just take from whoever has the money, who cares about what’s right or wrong
What happened to the hundreds of millions of dollars supposedly paid by the big 4 banks in fines etc?
Consolidated Revenue for Frydenberg to give to his bank buddies in the way of zero cost loan funding.
Went to JobKeeper amd JobSeeker recipients last year.
Building car parks at railway stations in Melbourne.
I will never vote Liberal again. I dont know who I will vote for, but it will never be Liberal
good on ya champ. A couple hundred, maybe couple thousand in the advice industry not voting liberal will make any diff whatsoever.
LNP?
I don’t vote at all, just pay the $80 fine and they get a NO VOTE – best money I ever spent
Josh Frydenberg is letting ASIC run rampant. It is easy to foresee that his new ASIC tax will exponentially close financial advice businesses. As more leave, the costs just keep increasing which will drive even more out.
Josh Frydenberg is responsible for closing hundreds of small businesses; and he’s working hard to make it thousands.
Labour will be equally bad. The issue is with the the mediocre FPA and AFA folk who are letting Frydenberg run riot..
Nope it’s squarely on Mr I Hate Advisers Frydenberg who has been killing Advisers for the last 8 years.
Typical Govt lacky trying to shift the blame.
Cannot trust these bureaucrats with their snouts in the trough…
What a joke this ASIC is, you are a criminal thief organisation that should be disbanded and rebuilt with not one of the current toxic industry destroying staff being rehired, how any of you can live with yourself beggers belief.
..and yet union industry funds have NEVER done exactly that – well at least not that a corrupt ASIC has ever investigated!
the money recovered goes to ASIC bonuses just write a blank cheque little gangster get caught selling money no worries we can hide that the crazy fees being charged by accountants no investigation needed
You can name the Senator in this article but not the ASIC respondent…..please explain?????
This just confirms the ASIC levy on advisers is completely out of order!!
Frydenberg’s Adviser Killing ASIC Levy continues to steal money from Real Advisers to fund Frydenberg’s best mates, the Big Banks that should be paying for ALL their own problems.
Frydenberg, you are a disgusting anti adviser thug.
Frydenberg, get your bank buddies to pay for their own ASIC crap.
Frydenberg, get the hell out of Real Advisers lives and pockets.
[b]Mr I Hate Advisers Frydenberg has to go !!!!!!!!!!!![/b]
Advisers lets get rid of this anti Adviser clown.
Wasting your energy mate – get our industry associations to get their act together rather than being behoven to insurers and banks for sponsorships.
You sound like a labour plant
So you want a Cabinet reshuffle and for the Prime Minister to appoint another Treasurer? Any preferred choice?
So LICENSED financial advisers are being hit with costs related to chasing UNLICENSED persons (note I deliberately did not call them unlicensed financial advisers as they ARE NOT financial advisers).
Hardly seems fair to me.
If the regulator wants to chase unlicensed activity then go for it. But the law abiding should not have to pay for the unlawful. Our ‘Adviser Levy’ should, be restricted for actions against licensed advisers.
Conversely they should use any revenue generated (fines, penalties etc) to offset the total cost.
Can’t have it both ways.
Great, so those that created the issues (banks) who are no longer in the space are no longer paying for the levy but those that remain who didn’t cause the issue are…makes perfect sense.
And to have to pay for issues that aren’t even directly related to advice is outrageous. Why should the advice sector have to pay for unlicensed advice enforcement? Sorry ASIC, but I don’t consider myself in competition with those breaking the law! This funding model is ludicrous.
What a joke are you kidding when is the class action from the advice industry against ASIC happening because I’ve had enough!!!!!
You should start a class action yourself. Get some direction from Peter Johnson from the AIOFP who had an attempt at coordinating a class action on behalf of advisers recently.