With total costs almost doubling in the last few years to $59.59 million — well over a 100 per cent increase — AFA’s general manager of policy and professionalism, Phil Anderson, said the majority of the increase has been in enforcement and the related increase in indirect costs.
AFA’s own analysis found that the cost of enforcement between the 2018–2019 financial year and 2020–2021 more than trebled from $9.5 million to $31.4 million. However, Mr Anderson told ifa he expects that figure to drop in the coming years.
“Presumably, the costs of enforcement will fall in the next couple of years as all the remaining royal commission matters and resultant remediation is finalised,” he said.
“With so much reform impacting the financial advice profession in recent years, we expect that this is also a driver of some costs.
“The big question is what is a reasonable steady state level of expenditure that reflects an efficient outcome for a sector that has largely transitioned into a profession? It would be good to know what ASIC thinks is achievable. However, we think that it should be possible to reduce it well below the level of 2018–19, particularly in the context of the reducing number of advisers.”
Meanwhile, since 2018–2019, the number of financial advisers in Australia has dropped from 25,000 to now below 20,000.
“Seemingly, the only way to achieve a genuinely sustainable cost structure is to drive significant cost reductions,” Mr Anderson said.
“It is, of course, interesting to contrast the cost applied to financial advisers who provide personal advice to wholesale-only clients, which has been less than $1 million for the last three years.
“That might be an unrealistic goal; however, it would be great to move materially in that direction.”
Mr Anderson added that he is hopeful the 2022 review of the funding model, to be undertaken by the Treasury, will form a solution that is “fairer and is conducive to a growing profession”.
ASIC has the recently announced “Red tape reduction unit” almost ready to go if only they could find them…! Meanwhile the increase unit is still doing an excellent job sadly…
Still like to know why, a face to face adviser full licensed, TPB registered and FASEA accredited has to pay for Westpac Bank’s inappropriately selling General Insurance over the phone. These associations fail to remind Government of that because it’s these bodies that they draw members from…..Isn’t it about time these associations call them out and start to put Advisers first as opposed to themselves….and isn’t it about time Advisers take a stand and demand conflict free representation.
The only way we are going to reduce the cost to consumers is to eliminate “annual fee renewals” red tape, that doesn’t exist in the UK or the USA. It should only be signed for in the initial SoA & in any subsequent SoAs (whenever they occur).
I disagree, thats about the only thing they got right. Simple annual agreements, no FDS or that other bollocks though.
If they had to just be redone with every SOA, most ‘planners’ would go back to never actually servicing their client books which caused all this regulation in the first place.
Lower the cost of providing advice, but make sure people actually provide a meaningful service annually.
Well ultimately it’s the consumer that ends up paying the additional cost of compliance and enforcement. I know our client fees have doubled in the last two years and we now have to turn away clients that need help, because we just can’t provide advice at a fair price for their needs.
I do laugh given the argument for pushing all of this reform through was to create better outcomes for the consumer.
It is amusing that the obsession with growth in all forms is so severe in our society that the AFA can refer to financial advice with a straight face as a [potentially?] “growing profession”, when financial advice would almost certainly be the fastest declining profession in Australia.