AFA News 09 March 2021. On Thursday 4 March 2021, ASIC released their final Cost Recovery Implementation Statement for the 2019/20 financial year, revealing conclusively that the ASIC Funding Levy, for financial advisers who provide personal advice to retail clients, would be $1,500 per licensee plus $2,426 per adviser. This represents a 160% increase in a two-year period. The history of the per adviser amount is set out in the following table:
This figure of $2,426 for the 2019/20 year was first brought to our attention by a document that was listed on the ASIC website late last year. We quickly responded to this by sending a please explain letter to both ASIC and Minister Hume. This was not the first time that we have raised concerns about the 2019/20 Levy with the Minister:
- In April 2020, we wrote to Minister Hume to request, amongst a range of other COVID 19 suggestions, that the ASIC Funding Levy for the 2019/20 year be waived as a result of COVID 19.
- In July 2020 we wrote again to Minister Hume and also to Ben Morton (Assistant Minister for Prime Minister and Cabinet and the Minister responsible for red tape reduction), after we had seen the ASIC estimate for the 2019/20 year, which was an amount of $1,571, which would have been a 68% increase in a two-year period.
- During the course of 2020, we shared our concerns about the ASIC Funding Levy with other influential politicians that have a good understanding of the financial advice sector.
The Driver of this Excessive Increase
In the June 2020 ASIC Levy estimate document, the total spend by ASIC on financial advisers who provide personal advice to retail clients was projected to be $40.1M. By December 2020, this figure had increased to $56.2M, an amount that exceeded the cost of any other regulated community. ASIC has not published a breakdown of the updated figure, however we understand that the increase is largely related to enforcement action being taken against the large institutions who were the subject of case studies in the Royal Commission. Disturbingly however, many of these same institutions have either exited financial advice or have significantly scaled back their operations. As a result, they have caused the increase, however, are not actually paying for this extra cost, and it is being left to small business financial advisers. We have been told, if this court action by ASIC against the large institutions results in penalties, that this will offset the Levy in future years, however, this is in our view, not an equitable way to operate. Clearly the ASIC Funding Levy methodology needs to change.
What Can We Do?
We have escalated this issue to all those in the Government who we can, however to this point the response has been little more than an acknowledgement of the issue and the problem that it has caused. We have also escalated this issue to the Treasurer’s Office. What has been made clear to us is that the ultimate decision maker on this is the Federal Treasurer, Josh Frydenberg. The Treasurer is also the person who has approved the funding increases for ASIC, following the Royal Commission.
The AFA will continue to advocate with whoever we can, to have this issue fixed, however it is now very late in the process. Invoices are scheduled to be available very shortly. Members and other financial advisers may choose to contact their local member of Federal Parliament or State Senator to express their concern, or alternative go directly to the decision maker.
We will discuss the ASIC Funding Levy further in our AFA Member Update Webinar on Wednesday 10 March 2021.
Issued 09.03.2021. AFA Policy & Education Update