The AFA pointed to the cost increase in its submission to ASIC’s consultation on affordable advice, saying the estimated levy charge for those providing personal advice in the 2020 financial year had been revised upwards from $40.1 million in June 2020 to $56.2 million in November 2020.
Factoring in the approximately 21,000 advisers authorised to provide personal advice to retail clients, the revised levy costs equate to around $2,400 per adviser, a significant increase on the $1,571 per adviser listed in ASIC’s cost recovery implementation statement in June 2020.
“We are not aware of the reason for the very late increase in costs from $40.1 million to $56.2 million, however we would assume that this could be attributable to enforcement expenses,” the association stated.
The regulator had ramped up its enforcement efforts dramatically in the last quarter of 2020, embarking on a ‘litigation blitz’ that saw it commit to filing 15 civil cases in November and December and referring 20 briefs of evidence to the Commonwealth Department of Public Prosecutions.
The SMSF Association had also referred to soaring levy costs in its submission to the affordable advice consultation, suggesting supervisory charges should be decreasing rather than increasing over time as ASIC made better use of modern regulatory technology.
Similarly, the FPA has called for a review of the levy in its pre-Budget submission, saying the fluctuating costs in ASIC’s estimates made it impossible for advisers to accurately factor it into their business plans.
Questions were raised around the updated levy charges for 2020 when ASIC’s November summary of levies, accessible from the regulator’s website in December, disappeared in January to be replaced with the original June estimate.
It’s understood the AFA had sought an explanation from government as to the drastic increase in charges, in the context of COVID-19 and other regulatory pressures on adviser businesses.
After ifa sought clarification on the issue, the updated November estimates were returned to the ASIC website.
The regulator told ifa the figures had been taken down “pending considerations of additional COVID-19 related measures”.
But with the government keen to pump the brakes on COVID relief spending as current outbreaks subside and the economy begins to recover, it’s understood further broad relief for the sector was unable to be confirmed.
“ASIC will continue to consider relief measures due to the impact of COVID-19 on a case-by-case basis,” the regulator said.
This is part of the reason my fees are going up (again) in 2021. The clients understand that the reason for the fee hike is Government red tape and compliance costs.
the only ethical course of action is to accurately inform each client why the fees are what the fees are – and I’m doing my bit. Wonder if the Liberal party understand this? I’m in a Liberal Seat but doing my bit to change that.
[i]”The SMSF Association had also referred to soaring levy costs in its submission to the affordable advice consultation, suggesting supervisory charges should be decreasing rather than increasing over time as ASIC made better use of modern regulatory technology.”[/i][i][/i]
Great point! ASIC is basically telling advisers to use technology better to make advice more affordable….but what are they doing to make their costs more affordable? Nothing.
Recent headlines don’t exactly give me confidence that ASIC is spending wisely:
– ASIC paid $240,000 for corporate coaching for execs to improve ‘effectiveness’
– ASIC shells out $1.5m on leadership gurus
Along with the fact that their “legal expenses” totalled $84m for FY1920! It’s enough to make you sick.
Funny that. When ASIC decides to spend a lot of money – it is the adviser who pays.
When a licensee decides to remove clients from an adviser due to some fancy interpretation of the rules, it is the adviser who pays. Licensees have an interest to remove clients that present even the remotest risk, which includes smaller clients as their complaints cost the same as those of larger clients to manage and some licensees do because who pays? Not them.
So the Advice levy is 56.2 MILLION DOLLARS for ASIC this year.
Well as I am paying a part of this I think I should be able to review the budget that this has created and weed out and remove all of the unnecessary fat that ASIC is paying in this $56.2 M. As I certanily do not feel that I am getting anywhere near this sort of value from ASIC, nor do I understand how the costs of regualtion of the advice industry can be this much.
So in the interests of full transparency – particuary after the Shipton expensegate affair – I think it is only right that we should be able to view, vet and then approve the budget to make sure that we are not paying for things that do not relate to the advise industry and that we are not paying over inflated salaries and benefits for this group of people.
Why do people keep calling this a levy.it’s a tax. Since it started , the only correspondence or help we have received from them is the bill. ASIC is behaving like a for profit corporation and offering zero service for the fee being charged.
A very real example of fee for no service. No opt-in, either.
Simple. It is going to them hiring more lawyers to be able to take advisers to court.
Money well spent.