Just days after ASIC released the cost recovery implementation statement for the 2021 financial year, which showed that costs to the advice sector have increased by more than $16 million, acting chief executive Phil Anderson slammed the levy as a “very poor investment”.
“As predominantly small business operators, advisers are being forced to invest a large amount of money into litigation against large institutions, many of whom are no longer even in the financial advice sector,” Mr Anderson said.
“There is no access to any upside for advisers on this investment, and a complete lack of visibility on what they are investing in and how those investments are performing.”
He continued: “The Government is forcing advisers to fund this litigation, and then taking any financial benefits that eventuate.
“Advisers only benefit from a partial recovery of a proportion of the costs of the case, but only where ASIC wins. This is totally unfair and unreasonable.”
ASIC’s reporting last week found that costs have gone up by over 340 per cent in the last four years and as a result, the AFA is calling for the removal of the litigation funding element from the levy.
“If the litigation funding element of the ASIC Funding Levy was structured as a managed investment scheme, advisers would be caned for recommending this to their clients,” Mr Anderson said.
“We would not like to see a repeat of the 2019/20 levy, where the actual was 54 per cent higher than the estimate.”
In recent days the results have been skewered by other industry bodies including the FPA that blasted the current formula as “not equitable or sustainable”, while the Stockbrokers and Financial Advisers Association (SAFAA) called on government to “urgently” review the model.
I beleive that this breaches the sole purpose test.
ASIC asked for a paper on how to reduce the cost of advice. Clearly removing this irrational levy on the advice industry should be fair and reasonable as is the expectation of the advice a planner provides to its community. ASIC is in breach of the FASEA mandate in that is not in the best interests of all parties, it is not fair or reasonable , it is conflicted and causing costs to advisers to be passed through the retail customers. Should an adviser with 100 clients add a $3.40 per customer levy on to their fees disclosure statement so it is rebated direct from those they wish to protect. If such customers elect to opt out , are they able
It’s not just the cost of the levy, it’s the added cost of all these additional compliance measures that do little to add to the client outcome.
Surely you meant to write $34,00
This Fed Govt is TOTALLY inept. Maybe the current Sportsbet numbers are a menacing omen for the next election.
ASIC given we are funding you, what’s the advisers return when civil cases are succesful?
How many ways would you like to hear the answer which in plain english is “Nothing!”
Disgusting from ASIC and the Government
You are a champion, Phil — keep up this pressure on incompetent govt officials not having an understanding of the reality of what they are doing
This is outrageous. They want affordable advice but increase levy year on year. Adviser numbers decrease at a constant rate each year which means the initial 30% will most likely be 40%.
So much talking about imprisonment to CEOs. What has happened to any of the banks and industry funds? A snap on the arm only. All about money only. Rip clients off fee for no service, companies=fines, adviser=imprisonment and banned. Unbelievable. ASIC is just looking for money, nothing more.
What happened to the CEOs is they walked out with mult-million $ cheques and left us with the compliance burden for the problems they created with their superior corporate knowledge.
Well said Phil take the fight to government until your new incoming AFA CEO Helen Morgan-Banda joins you soon.
Hope Helen can advocate as well for AFA members on issues such as this like the MBAA have done with great results for their mortgage broker members…
The role of the ASIC should be tendered out – known price for the year ahead and you would also get a clear plan of the what they planned to do – rather than the current arrangement where ASIC just spends and spends, then tells you what areas they worked on – but there is no proof they did anything?