Licensees and advisers should collectively expect to pay an additional $165 million a year in compliance costs should the government's draft bill on new adviser standards be put into play.
According to the bill's explanatory memorandum, several of the proposed reforms will increase average annual regulatory costs for businesses by $77.3 million while individuals, including new and existing advisers, will bear an extra $87.8 million a year.
There will be no additional costs to community organisations. The memorandum states that all new costs will be offset from within the Treasury portfolio, however it does not provide details.
For licensees, most of the additional costs will be associated with developing policies and procedures to ensure their advisers are complying with the new professional standards and ethical codes.
"This will include updating their IT systems to track adviser education and ongoing professional development and ethical training," the memorandum states.
Meanwhile, new financial advisers will incur costs associated with gaining a three- or four-year bachelor degree, which may "impose significant costs from both the course fees and the hours of study accumulated".
Existing advisers will be responsible for the costs associated with updating their educational and ethical qualifications.
Speaking to ifa, FPA chief executive Mark Rantall said that estimated cost will likely increase once the independent standards-setting body, which is expected to be funded by the industry, is operational and if a degree requirement is placed on all existing advisers.
"There is little provided around those estimates. One would assume that they would include the cost of education and also the cost of running and establishing the independent counsel," he said.
"We haven't seen the breakup of that costing but if in fact existing advisers are required to obtain degree qualifications, then those estimates could well be exceeded. This is something that advisers should be aware of.
"As we put in our submission, we're not supportive of the need for existing financial planners to obtain degree qualifications. We think this is legislative overreach and isn't in the spirit of what's being negotiated."
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 18 Feb 2019ASIC appeals Westpac best interests court decisionBy Adrian Flores
- 18 Feb 2019FASEA mostly funded by the major banksBy Adrian Flores
- 15 Feb 2019ASIC to undertake harsher penalties against banksBy Eliot Hastie
- 18 Feb 2019NAB most distrusted bank, survey findsBy Sarah Simpkins
- 15 Feb 2019Court restrains unlicensed firm from operatingBy Adrian Flores
- 15 Feb 2019ASIC used Dover whistleblowing to shut licensee downBy Adrian Flores
- view all