Forget the ASIC levy, advisers are now being asked to fork out an additional $1,186 to fund the CSLR scheme.
Let’s wind back the clock to June last year when Minister for Financial Services Stephen Jones announced that the ASIC levy freeze instated by the previous government would not be extended. Advisers were understandably outraged, especially considering the government’s professed objective to enhance access to affordable advice.
In the months since June, the government has been pushed on numerous occasions to rethink the ASIC levy – which currently stands at $2,818 per adviser – but to no avail.
The Financial Advice Association Australia (FAAA) and the Association of Independently Owned Financial Professionals (AIOFP) spoke the same language for probably the first time, encouraging the government to review the unfair system.
“We have decided to commence some lobbying on this levy issue due to the pain and anger this is causing many members, we have not seen this much frustration since the grandfathering revenue ban was announced,” AIOFP executive director Peter Johnston said in July.
The ASIC levy also occupied a considerable amount of time at Senate estimates over the months since June, with Senator Andrew Bragg recently asking Treasury officials whether the 150 per cent increase in the levy is conducive to more affordable advice. Needless to say, the Treasury officials deferred the questions in a style worthy of politicians with utmost loyalty to their party.
Despite profession-wide condemnation, the only time Jones has touched on the levy (to ifa’s knowledge) is at the AIOFP’s November Canberra conference where he said he has more pressing priorities to address before turning his attention to the levy.
“We’ve got an industry funding model right across the board, not just for financial advisers,” Jones said when asked by an AIOFP member whether he planned to tackle the escalating ASIC levy.
“Is it perfect? No. Are there areas it might need to be polished up? Yes, there might be,” the minister said at the time but added that he wanted to “settle on the stuff currently in front of the government” in a reference to the Quality of Advice Review.
And while the profession has been waiting for Jones to turn his attention to the levy, it’s been hit by yet another prejudicial cost that the advice associations believe could actually put firms out of business.
Let’s cast our mind back to June again, when Jones declared “victory” for victims of financial misconduct as the Compensation Scheme of Last Resort (CSLR) passed the Senate.
“This is a significant victory for over 2,000 people who have been waiting for a resolution on their cases,” the minister said, adding at the time that to ensure the scheme can commence as soon as possible, the government would fund the costs to establish the body to operate the scheme and the costs of the first levy period.
Well, as of this week, we now know that the cost of that first levy is $4.8 million. However, the estimated cost of the second levy – which the government won’t fund – is a much larger $24.1 million. And it came as no surprise that the majority of that $24.1 million would be charged to advisers – or $18.5 million.
Broken down, that sum will see each individual adviser hit by a $1,186 bill which will mostly be used to recoup the funds taken from individuals duped by Dixon Advisory.
According to the FAAA, this additional cost could drive advisers out of business.
“The CSLR is intended to promote trust and confidence in the financial services sector and in particular, financial advice. However, if advisers are driven out of business by rising costs, through being made to pay for the poor behaviour of those who left the sector years ago, there won’t be a financial advice sector left to have confidence in,” the CEO of the FAAA Sarah Abood said this week.
She added that coming as it does on top of an historically high ASIC levy, “this flies in the face of making advice more accessible and affordable for consumers”.
ifa wholeheartedly agrees with Abood that it’s “extremely concerning” that advisers are once again being asked to pay for the wrongdoings of a firm that has long been in administration.
If the government fails to respond to advisers this time around then a victory for Jones could truly equal the last straw for advisers.
Responding to ifa’s request for comment on whether the minister feels this scheme is conducive to his goal to make advice more accessible and affordable, Minister Jones said: “The CSLR will further strengthen consumer trust and confidence in Australia’s financial system.”
“The government has outlined a comprehensive package to make quality financial advice more accessible and affordable.
“Key to this is reducing red tape that adds to the cost of advice without providing a consumer benefit, and improving the pathways for new advisers to come into the industry to increase the number of financial advisers.”
No doubt this is all just to get us to accept “qualified” advisers joining us in order to reduce the costs?
Oh yes and they said we need to make financial advice cheaper for the general public, that was the reason for the QAR review Oh yes …
The unintended consequences of the ASIC levy amd CSLR is that advice fees will need to go up for many advice businesses which will increase the minimum cost to serve a client
This will have an impact on the advice gap that currently exists in Australia amd make advice even less affordable
How about the dealer groups/advisers supported by the FAAA refuse to pay the Levy? Continue business as usual. They can’t put everyone behind bars! They have gone too far.
I urge all financial advisers to get behind the AIOFP in its efforts to influence both Labor and Liberals to reform our compliance nightmare.
Look at what Mortgagee Brokers achieved by being united.
To achieve a pollical outcome, we must offer our influence in exchange for what we want. This is what the Banks do and at present “The Banks tell the politicians to Jump and only response is How High”: The Banks buy these outcomes with donations…..
We need to achieve the same outcome.
We cannot offer the Millions in donations; however, we may be able to offer either party Government.
Our clients are voters, and we have the capacity to influence them to vote one way or the other, by using our knowledge of what influences them.
Bennelong and Kooyong are good examples of our influence at work.
I strongly urge all advisers to join the AIOFP and show Canberra that we are “United” and we will use our influence with voters to change a government if necessary to protect our clients “Best Interests”.
We absolutely need to be united, but not behind that group of out of touch riskies. As soon as Peter Johnston mentions bringing back grandfathered trails that were ‘stolen’ from Advisers, all credibility goes out the window. It’s embarrassing. There’s 17k Advisers in the country…..what power do we really have when it comes to politics. I don’t know too many Advisers that are going to go and push their political agenda on their client base. Ridiculous to think they would.
Surely Advisers would have received the message that they are not wanted, when the Minister & Treasury announced the term Qualified Advisers. I suspect the 15,000 advisers number needs to be reduced to about 1,000.
Seems like we’d already forgotten also about the Registration Levy, which was waived in 2024 that will be imposed in 2025. Have we forgotten about the additional costs the come with mandatory breach reporting obligations that dealer groups will pass on ? Financial Advice in this country is dead. Prepared to work in call centres is my advice.
Product providers and their employees can only offer ‘product advice’, not financial advice, because then it becomes ‘financial advice’ disguising product advice.
Has it not been product providers and AFSLs (Dixon), who really were the perpetrators who hurt consumers?
Why are financial advisers (ARs) having to pay a levy for the sins of the product providers and/or AFSLs?
And the general public is willing to pay max $500 max for advice, go figure LOL
Well how many planners voted for jones and his mate albonese? Thats the funny part in all of this. You reap what you sow.
Better than the previous government but yes agree that the remaining advisers have to pay for something that is not our fault is downright white collar robbery
Yeh and Frydenberg, O’Dwyer and Hume did Advisers so many favours.
Labor owned and run by Industry Super.
Liberal owned and run by the Banks & Life Co.s
Neither give too hoots about Real Advisers
Shareholders of E&P Group should be wiped out and assets sold to assist reimburse affected people. Those responsible for this mess should be eliminated from owning corporations or working as a director and the advisers should be banned. Dixons was Pheonix’d into Evans & Partners. Soooo angry!
ASIC new for 10 years of Dodgy Dixon’s MIS fiasco and ASIC did NOTHING.
ASIC let Dodgy Dixon’s float on the ASX knowing about MIS fiasco.
Thus ASIC let Dixon’s directors pocket 10s of millions and wander off into the sunset.
Dixon’s Directors and ASIC should both be held CRIMINALLY LIABLE AND PAY FOR THE WHE MESS.
To Stephen Jones
In our one-on-one discussions, I was impressed with your determination on fixing the mess left by the previous government and whilst I am prepared to give you some space to get the right outcome for consumers; however, I am disappointed by the lack of progress to date.
CSLR should be your crowning glory, however you have made the mistake of giving product providers a free rein to cause future losses without any taking any responsibility for their failures.
Product providers must be excluded from the financial advice sector and financial advisers must not be the scapegoats for product failure.
ASIC must take more responsibility to ensure that every new Product adheres to a code of practice that gives consumers some confidence that this should not fail.
ASIC needs to ensure that every product provider has adequate arrangements in place to meet redemptions in difficult markets.
Financial advisers DO NOT HAVE THE CAPACITY to regulate Product Providers, ASIC does have this capacity and should be required to exercise these powers.
I strongly urge you to exclude all claims relating to Dixons be excluded from adviser’s levy calculation as promised.
William Mills
Price Financial Intelligence
As an industry wide protest against this cost, Financial Advisers and their Licensees should band together as a united front and simply say NO, we are not going to pay it as it is manifestly unfair and discriminatory.
They think they have us over a barrel, but until the 15,000 advisers all consistently say NO and refuse to pay it, then they have got everyone over a barrel and they will keep running advisers over with that barrel until they are broken and lifeless.
Oops I just said that too! But yes, just refuse to pay – everyone.
Let’s be real…
ASIC levy, CSLR levy, etc, etc its a few grand. Let’s round up and call it $5,000 per adviser.
If your practice can’t absorb this, nor has the pricing power with clients to pass it on, are the levies the issue or are you just running a poor business?
Are the costs BS? Sure!
Should we remaining advisers be paying for mis-deeds or prior fools? Nope!
Are you really going to go broke or leave the industry over a few grand? Highly unlikely, or IF likely, then I’d suggest you were headed that way anyway.
Our industry is coming into a period of amazing demographic tail-winds, in addition to increasing trends to seek advice, delegate/outsource, etc. Growing super assets and so on. If you cannot utilise these in your favour to offset the levies, then the issues isn’t the levies.
Am I angry and annoyed? Sure. Surprised? No. I just get on with making my business more efficient and more client focused and more able to serve more people and in doing so, the profit growth outstrips the expenses growth so I win, clients win, my staff win and I really don’t have to give a stuff about how useless all politicians are.
Well said
Yes fully agree with this. However, it is the principle of it and that really pisses everyone off!
You are 100% correct, however I think the frustration lies in the accumulation of these levies, the large licensing & PI fees charged, and the inefficiencies of the compliance regime. The total costs of these are much much more than $5k, and further frustration is incurred when the advice industry has no voice in how their own industry is run.
Let’s be real.
The public at large are NOT served well by the introduction of “Qualified Advisers”.
This is back to the future pre Royal Commission and people are going to be hurt by this. It is going to come unstuck.
I’m glad that your firm is profitable.
I take a broader focus.
Let’s be real. The CSLR cost to advisers will blow out significantly year after year. In addition, you will soon be competing with “Qualified Advisers” who will provide free financial advice over a broad scope of advice areas for clients. Your costs will continue to rise but revenue per client is going to plumet. If you provide advice for a fee to a client who could have received the advice for free from their super fund qualified adviser for free have you breached the best interest duty?
A scorpion wants to cross a river but cannot swim, so it asks a frog to carry it across. The frog hesitates, afraid that the scorpion might sting it, but the scorpion promises not to, pointing out that it would drown if it killed the frog in the middle of the river. The frog considers this argument sensible and agrees to transport the scorpion. Midway across the river, the scorpion stings the frog anyway, dooming them both. The dying frog asks the scorpion why it stung despite knowing the consequence, to which the scorpion replies: “I am sorry, but I couldn’t resist the urge. It’s my character.”
Politicians are politicians. If you expected anything but Stephen Jones to do nothing and add to the red tape and costs then that’s on you, not him.
The larger practices with multiple advisers will increase client fees and or absorb the ever rising costs. The 1 Adviser practices will feel it like every other cost increase over the last 5 years. The Govt. has zero interest in small business and would prefer if we withered away so that there is less competition for the ISF.
This isnt about Labor .. both sides of govt have been equally as bad. I know with myself its the bad policy around needing a AFSL or being a rep of one to provide advice thats truly the cost thats driving me out of business .. this could be such an easy fix – get rid of AFSLs !!! for crying out loud i cannot believe people dont see this … AFSL for product providers only
Totally agree. Levy was told, but ignored it because it didn’t suit her institutional clients. When I raised it with her, she just said ‘if anyone is not happy with their dealer group, they can just self licence’, without any idea whatsoever of the work involved. Anyway, I followed her advice. It was disruptive for a few months, but far easier than I thought and I am now saving heaps of money. More importantly, we have rid ourselves of an insane additional layer of bureaucratic nonsense and punitive compliance that was damaging our business. It’s the best thing we have done.
So why do we need to pay for PI if we have to pay for CSLR which is essentially and insurance.
You could blame ASIC for the Dixon’s case – when they suspended the Dixon AFSL the condition was imposed that Dixons must maintain compensation arrangements until April 2023. Woefully inadequate timeframe given how many Dixons clients lost money and were encouraged to lodge their concerns with AFCA promptly. Perhaps the Senate need to launch an enquiry into ASIC’s procedures for cancelling an AFSL, having regard to the ability of clients to have fair recourse under the AFSL’s compensation arrangements. Otherwise, why impose compensation arrangements at all?!
More Red Tape of course. I can hear them saying “consumer protection” etc……. All in the name of???
And don’t be surprised by platforms like this, when they undermine us as well.
My comments here are constantly censored – just like Google and YouTube when it conflicts with their conflicted agenda. Prove me wrong IFA…go on. Publish my comments.
To Stephen Jones
In our one-on-one discussions, I was impressed with your determination on fixing the mess left by the previous government and whilst I am prepared to give you some space to get the right outcome for consumers; however, I am disappointed by the lack of progress to date.
CSLR should be your crowning glory, however you have made the mistake of giving product providers a free rein to cause future losses without any taking any responsibility for their failures.
Product providers must be excluded from the financial advice sector and financial advisers must not be the scapegoats for product failure.
ASIC must take more responsibility to ensure that every new Product adheres to a code of practice that gives consumers some confidence that this should not fail.
ASIC needs to ensure that every product provider has adequate arrangements in place to meet redemptions in difficult markets.
Financial advisers DO NOT HAVE THE CAPACITY to regulate Product Providers, ASIC does have this capacity and should be required to exercise these powers.
I strongly urge you to exclude all claims relating to Dixons be excluded from adviser’s levy calculation as promised.
How about if everybody just refused to pay it? Simplistic I know, but sometimes the best results come from the simplest actions. If this industry is ever going to stand a chance of surviving we are going to have to stick together and start pushing back.
Agree and sue ASIC for reputational damage that could have been avoided if they did their job in the first place.
Why are we bothering dealing with these muppets. We should all make it clear that our profession has lost confidence in this government and we should all be actively campaigning against them.
100% correct – complete waste of time discussing anything – Jones has been Minister for close on 2 years and all we have heard is lies, gaslighting, fake promises – blah blah, blah. It’s appalling representation as a public servant who is paid very well to represent all of the FS stakeholders. It is not a game, people’s lives are at stake (not to mention the already 30 odd suicides post RC), but just try getting anyone in Canberra to read 1 page of the mental health survey…
i dont disagree but the previous govt was even worse sorry to inform you
The previous government is no longer in government.
The current government is only interested in adopting policies that benefit industry super funds.
Sorry to inform you.
agree, lets all refuse to pay
Client fees increasing. Additional costs to advisers. But the government says it wants advice to be affordable and available for those who need it. No one is even talking about the “natural attrition” of advisers into retirement over the next 5-7 years just through age. And the answers to bolster adviser numbers are to have “qualified” advisers sitting in super fund land. Sounds like a “distribution channel” to me. The more things change the more they stay the same. When will a government have someone who understands the industry and advocates for a better way of doing business so that advice “can” be affordable to all those who need it – not just the affluent.
Don’t be surprised when they introduce a QAR of Levy of $1500 per adviser backdated to 2023
It truly is disgraceful. Labor listens to no one.
Why are the ISF ‘qualified advisers’ exempt from the ASIC levy and the CSLR levy?????????????? Follow the money trail to Canberra.
The reality is that in a year or two, Jones will be promoted for not fixing the “hot mess”, high fives in the Cabinet, and the Financial Advice Industry will continue to bleed advisers. It is laughable that there are Industry Execs. still trying to justify all of the legislation that has been implemented and the Levies etc.. whilst nothing has been fixed.
Where is QAR though? Is it still in consultation with everyone except advisers?
It is in consultation with qualified advisers at industry funds champ
Excellent comment – made me laugh – if you don’t laugh you would cry at this stuff. seems very accurate and not a good situation for a First World Democracy.