The government’s decision to slash $120 million from ASIC’s funding may have a number of implications for the advice industry, including cost hikes for dealer groups.
Treasurer Joe Hockey last night announced measures in the federal Budget to cut $120 million in funding to the corporate regulator over five years, starting with an initial reduction of $26 million in 2014/2015 and issuing ASIC with a directive to “readjust its priorities”.
However, speaking to ifa from Canberra last night, FPA general manager, policy and conduct, Dante De Gori, said the association will be watching closely to see how the regulator responds, particularly looking out for any changes to licensing fees.
"There's been talk about user-pays models and changing the funding model around for licensees and financial planning businesses," Mr De Gori said. "The question is which divisions in ASIC they're cutting those resources from – and what direct impact, if any, it will have on the financial planning sector."
However, others have suggested the cuts may be a positive outcome for the advice industry, with parliamentary secretary to the treasurer Steven Ciobo pointing to a new era of self-regulation.
“We are wanting industries – not just the financial services industry, all industries – to be more self-reliant,” Mr Ciobo told a post-Budget event co-hosted by AMP and the Financial Services Council this morning. “There will always be (as a general statement of principle) our preference for self-regulation over the need to have a regulator [that is] tax-payer funded intervening in the field.”
In a statement issued last night, the AFA also touched on the ramifications of the ASIC cuts for the advice industry, with CEO Brad Fox claiming that as the industry “continues its progression towards becoming a universally recognised profession, the opportunity for greater self-regulation will increase” and that the cuts to ASIC may be positive for the industry in acting as an “impetus to bring this forward”.
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