In its pre-budget submission to Treasury, CPA Australia noted the federal government had so far done little to reduce costs for businesses as the economy faced its greatest challenge since the 2008 financial crisis.
“The government should use the budget to announce the reduction or removal of various fees it imposes on business, especially small business. This will ultimately also benefit consumers who invariably pay for such fees,” the accounting body said.
“For example, the government should reduce or preferably remove fees imposed under ASIC’s industry funding model, including fees imposed on AFSL holders and SMSF auditors.
“Further, the government should remove duplicated fees where service providers provide advice or services that fall under multiple regulatory regimes, such as financial advisers paying fees to ASIC and the TPB.”
The body said it was against the full cost recovery model for ASIC funding in its current form, as it “fails to recognise the impact on the financial viability of those that need to pay the charges, particularly small business”.
In addition, CPA Australia said the model had a “negative impact on the supply of industry participants such as insolvency practitioners, SMSF auditors and advisers” and did not take account of “the cumulative effect of other compliance requirements on those having to pay fees”.
The accounting body said the government should move to a partial cost recovery model for the regulator, or consider modifications to the current model, such as allowing penalties awarded from ASIC investigations to offset the regulator’s funding costs.
The comments come following recent criticism from the AFA, FPA and SMSF Association around soaring levy costs, with estimated adviser levies for the 2020 financial year having increased by 60 per cent over the last six months.
“We call on the government to both provide relief to financial advisers with respect to this increase in the 2019-20 ASIC funding levy, and also to fix the inequity in the current model,” the AFA said in its submission to ASIC’s affordable advice consultation.
“We would also like to see greater transparency in terms of the costs that are included in the financial adviser ASIC funding levy.”
It is inconsistent for ASIC to be responsible for overall consumer protection in financial services, while at the same time being dependent on funding from a small number of licensed entities. Consumers are most in need of protection from unlicensed providers, who don’t pay ASIC at all.
ASIC’s myopic focus on licensed providers is not only making it harder for consumers to afford professional advice, it is ignoring the major sources of consumer harm. ASIC should be funded from consolidated revenue, and forced to focus much more of its attention on harmful unlicensed financial advice.