The freeze was introduced in August 2021 by the-then treasurer Josh Frydenberg as “temporary and targeted relief” for financial advisers. Among other things, it saw ASIC levies charged for personal advice to retail clients restored to their 2018–19 level of $1,142 per adviser.
“The sub-sector as a whole will pay an estimated $46 million less in ASIC levies in 2020–21 alone, with further savings flowing in 2021–22,” Mr Frydenberg said at the time.
Despite calls for its immediate extension, in announcing the release of the final report on the review of the Australian Securities and Investments Commission (ASIC) Industry Funding Model (IFM) on Monday, Financial Services Minister Stephen Jones said the freeze will 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.
“The review recommends reviewing each of the four sub‑sectors that fall within the financial advice sector and whether the existing sub‑sector definitions, metrics, and formulas remain appropriate. This will be progressed alongside implementation of the government’s Delivering Better Financial Outcomes package which includes our response to the Quality of Advice Review,” he added.
According to the review, the levy relief cut the total regulatory costs for the sub-sector from $60 million in 2020–21 to $25.8 million, and from $56.7 million in 2021–22 to $22.8 million.
The advice community has for some time been concerned about the 2022–23 financial year, which many predicted would see a big increase in fees paid by financial advisers following the apparent expiration of the two-year freeze.
Namely, despite calls from advice groups, Labor didn’t extend the freeze when it assumed government, signalling that costs would rise exponentially.
Speaking to ifa in April, Financial Advice Association Australia (FAAA) head of policy, Phil Anderson, said: “We are now in a year where financial advisers are exposed to the prospect of a significant increase in the levy”.
“There are a number of factors in play with this, including the significant reduction in adviser numbers, an expected decline in the spend on enforcement activity, however an increase in other ASIC costs, such as through the creation of the FSCP (Financial Services and Credit Panel).”
“We have previously called for an extension of the ASIC funding levy relief in the context of the review of the ASIC funding model. We are, however, not aware of any plans by the government to provide any further relief or make short-term changes to the model that could lead to a reduction in the amount of the likely increase,” he explained.
Additionally, Mr Anderson cautioned that from 1 July 2024, financial advisers could also be exposed to a further increase to fund the proposed Compensation Scheme of Last Resort (CSLR).
10 recommendations made
Led by Treasury in consultation with ASIC and several government departments, the review has found that while settings of the ASIC IFM remain appropriate, refinements can be made to improve the way regulatory costs are recovered and to communicate IFM settings to industry more effectively.
As such, the review made 10 recommendations, of which four are directed to ASIC.
Key recommendations include:
- Spreading the costs of certain regulatory activities (taking action against unlicensed operators, regulating emerging sectors, and capital expenditure) either across a wider population or over time to recognise the wider benefits of those activities
- Undertaking further consultation to ensure sub‑sector definitions, metrics and formulas used to calculated levies remain fit‑for‑purpose
- Delegating the fee‑setting power to ASIC to ensure fee amounts continue to reflect full cost recovery
- ASIC to enhance its reporting, transparency, and consultation arrangements on the IFM
“The Albanese government is committed to maintaining appropriate industry funding arrangements for ASIC. The government will work with ASIC, industry, and other stakeholders to implement these recommendations,” Mr Jones said.
“The government also supports ASIC taking action to implement the recommendations directed to it, to improve its engagement with industry and to streamline its reporting arrangements, particularly through its Cost Recovery Implementation Statement.”
Ironic how they refer to the IFM as the ‘Industry Funding Model’? What Industry? What happens when there is no Industry? They are effectively asking passengers on the Titanic to pay for the gaping hole in the hull.
“Let the beatings continue until moral improves.”
Well Im out, great work in ruining advice Stephen Jones
#me too
So no changes legislated but ASIC Fees to Increase and include COSLR – SO COSTS TO PROVIDE ADVICE FURTHER INCREASE AND NO LEGISLATED CHANGE ON CHOKING RED TAPE
Compared to other consulting Professions such as Accountants and Lawyers – this is why the uptake for the Advice Profession is at all time lows: Licensee $50,000 p.a., Levies + CLSR + $10,000 p.a., XPLAN $10,000 p.a. – $100k before you’ve logged on in the morning…
You forgot PI @$16,000 a pop!
Well done FPA and other groups advocating – obviously you are all doing an awesome job? What is it you are paid for again?
The AIOFP is now so enamored with Stephen Jones that they won’t even come out and criticise this. I’ll not be renewing my membership.
I get the message, I need to resign and work for an institution that buries advice fees in product fees with less compliance as a sales person. Professional advice is suicide
Arrogance, hubris, blame shifting, ignorance and blind conflicted bias – enough is enough – a reckoning is coming for Labor and Jones.
Nothing but more costs and zero support – goodbye Albanese, goodbye Jones.
I want to opt out of this fee. It is completely unfair. What other professional has to pay for a government regulator or ombudsman service. They want us gone let’s face it. Decisions like this will lead Australians to poverty as most don’t know how to invest or save even when they have wealth and they are too scared to with cyber issues now. It will be interesting how the govt intend to fund the Centrelink payments when there are no advisers left to help Australians growth their wealth due to the lack of business return and shall we say high liability that we face in this industry. We should not have a high rate of suicide in our profession either. Why are my teenagers reading about this and opting to not go into financial planning. It’s decisions like the above (I have no idea how it happened and was endorsed in the first place) that just add to the whole mess the government have made for us. I am sick of trying to reason with the idiots. They have no idea on what we go through.
hear, hear! we are all lambs to the slaughter. They refuse to listen to the Advice Profession. The only option left is to vote them back out, just like we did with Frydenberg, Hume & Co.
Making advice more affordable!…..
Do the super funds and their relevant providers need to pay the levy too? Would not surprise me one bit if actual (qualified) advisers are stuck with the bill.
My fees are rising by another 20% on 1 July in any event.
We are seeing the dangers of allowing a Government department to effectively write its own cheque and pass the costs onto a 3rd party. BUT, when they spend our money and win a case, the proceeds go directly to the Government coffers. So for financial advisers its all downside! They don’t even do a good job. This is effectively a cost born the survivors in the industry who haven’t done anything wrong.
Where is the service for this fee let alone an opt in option?
The higher costs from ASIC levies and CSLR will massively outweigh any benefits from QAR. Labor is giving a little with one hand, but taking much more away with the other.
Professional financial advice is going to become even harder for most consumers to access. More and more consumers will fall victim to dodgy advice and scams. That’s a big fail Jonesy.
or just ensure all those massive fines from the usual perennial culprits, the banks and the like, don’t go to consolidated revenue but back to ASIC to do its job properly and ethically…….
100%
Life Offices and Super Funds: Advisers must punished, unmercifully, until their numbers are crushed. Any excuse will suffice. Constantly change rules, increase fees, decrease remuneration, increase responsibility, create confusion, death-by-1,000 cuts, etc.,
With all the commentary on making advice more affordable and improving access, does it not occur to them the ASIC levy is a major contributor to the cost to serve. Do they not get that this cost is passed onto mum and dad retail clients? Forcing advisers to pay for ASIC’s activities that have nothing to do with financial when MIS operators got a nice carve out.
like to see this bollocks applied to any other industry – be nice to see the lawyers in this scheme –
Don’t worry – the lawyers are finally going to get theirs with AI. No more posing in front of shelves full of leather bound books, trying to look intelligent.
Yep, total disgrace, Jones shaping up after all the so called industry support to be nothing but a total train wreck, we should have known, nothing ever changes in the red corner
Speechless. Such a conflicted and vile regulator.
Fee setting power is to be given to ASIC. This Labor government is a joke – fancy giving a bureaucracy total power to charge whatever they like.
100% guarantee that the ISF’s carve out adviser will not have to pay