Publicly available tender documents suggest ASIC awarded at least $90,000 in expert witness contracts to advice firms in 2020, and more than $200,000 in 2019.
Of tender documents awarded in 2020, $73,507 went to Queensland advice practice Tupicoffs, while $20,075 was awarded to Asset Class Financial Planning.
In 2019, former ipac WA chief executive Patrick Canion was awarded $82,280 in expert witness contracts by the regulator, while Tupicoffs again received $121,096.
The news comes following an increase in ASIC supervisory levies for the advice sector of more than 160 per cent over the past two years, with the regulator having revised up its levies for the 2020 financial year by more than 60 per cent between June and November last year.
Advice licensees will be charged a base rate of $1,500 in levies plus $2,426 per adviser that provides personal advice to retail clients to cover ASIC’s costs for the 2020 year, despite estimates released in June that the levies would amount to $1,571 per adviser.
The regulator’s annual report for 2020 reveals its legal and forensic expenses bill increased by more than 40 per cent year-on-year, with approximately $46.4 million spent on legal costs for the financial year compared with $32.4 million in the 2019 year.
ASIC’s total costs paid for goods and services also increased to around $139 million in the 2020 year, up from $132.5 million in 2019.
Financial planning academic and former AIOFP chair Adrian Raftery said advisers may be rightfully concerned to discover some firms were profiting from skyrocketing costs at the regulator that were being passed back to the broader industry.
“To earn $442,379 as an adviser – based on an average fee of $2,800 – you would need to write 158 SOAs, however it appears you can earn that from ASIC by only writing four or so expert reports,” Dr Raftery said, referring to the total amounts that one firm had earned from expert witness services in the past four years.
“ASIC don’t care about the costs, it’s funded by the advisers retrospectively anyway through their annual levy.”
The regulator was approached for comment but did not respond before deadline.
Does Financial Rescue which is part of Tupicoffs charge it’s clients on a commission basis or does it charge them a fixed fee for this financial advice? If it takes a commission (a percentage of a successful claim) then the group is not truly independent, is it? Unless they have deliberately seperated the companies to get around me the independence rules?.
I just received my ASIC bill for $10K with 20% per month late payment penalty interest & cancellation of your license if very late. And they say they want more Australians to receive affordable advice but what they do is the complete opposite. Obey the Masters (of slapstick)!
Expert witnesses? So you get people that are more out of touch than a 30 year old marriage to write a expert opinion and pay them for it, give me a break what makes these guys experts, not taking commission?
I’m not sure what the criticism is here… $300,000 is barely even a measurable percentage of ASIC’s P&L and certainly isn’t what caused my fees to increase exponentially. The alternatives to this are:
– These people work for free (hardly in the spirit of democratic capitalism); OR
– ASIC prosecutes without expert witnesses … likely resulting in less advantageous outcomes because they aren’t experts, just out of touch regulators.
So, no fee is to excessive if it is not significant in comparison to the overall budget of ASIC? Wow, I guess that is a commonly held view at ASIC (James Shipton et al)?
All nose deep in the trough.
The principal of Tupicoff, Neil Kendall, was Chairman of the FPA’s board for a few years so he was likely a correct person to choose. Expert reports are expensive and a lot of work so this may be high but quite possibly not excessive.
Looking at his profile he doesn’t have a degree in a related discipline. I thought ASIC felt the degree important?
Not if you’re working for ASIC crucifying advisers….
Isn’t Tupicoffs a highly awarded advice practice and an influential firm in the failed FPA?
I have just downloaded the ASIC Invoice for the AFSL – $256K over the estimate of 6 months ago. Are ASIC just having a lend of us or are they so incompetent or just out of touch that a 60% increase on your costs without any actual delivery of services is considered justified. The observer in me believes that ASIC have increased the cost on the back of the Governments decision to disband FASEA and the knowledge they will no longer be able to get the Insto’s to fund the bloated Bureaucracy that is FASEA.
From my Industry Perspective and after 45 years in Financial services ASIC deliver very little in regulating the industry and are never around to fight the battles- but swoop in afterwards to bayonet the wounded and those left standing in the industry who drew their attention to problems in the first place.
When you look up the definition for Fee for No Service you are directed to ASIC as the example.
ASIC make lots of noise about the cost of advice but are the major cause of increased costs to consumers.
AMP owned ipac person as an expert witness? That is hilarious, next they will be calling union thugs from ISA as experts as well.
and most of these also refer to themselves as being independent advice practices and being left alone by ASIC, yea i know you won’t publish this comment, but don’t you think it is time we all addressed loud and clear what is happening here and that it is costing people their business while some are untouchable.
To earn $442,379 as an adviser – based on an average fee of $2,800 – you would need to write 158 SOAs, however it appears you can earn that from ASIC by only writing four or so expert reports,” Dr Raftery said, referring to the total amounts that one firm had earned from expert witness services in the past four years’?? What about review clients whereby a RoA is written,.So narrow minded to assume that income is earned from an SoA fee. Maybe it is time we need a new AIOFP chair that has a greater understanding of advice practices.
We need to shut them all down and start again. Too much dead wood in all the associations. Most of the heads and influencers are old lifeys with no up to date outlook on the industry. We have dodos talking to the government on our behalf and we wonder why we are going extinct!
I hope you have been active yourself in meeting with politicians to educate them on our industry.
So 316 ROAs Matthew? Not sure what your point is. Mine was that there is alot of work required to earn $442k that one firm received from ASIC in a restricted tender process. And suggest you go back to reading classes so that you get a greater understanding of grammar … former chair = no longer there!
I’m surprised you haven’t gone back to reading classes to ask them to correct the blatant error in the article – “Financial planning academic”
former academic = no longer an academic!
There’s a lot of former everything. former chair, former academic. Not much current stuff is there?