Call to impose an exit fee on big banks to pay ASIC levy

Major institutions leaving the financial planning industry should be made to pay a per-advisor levy or exit tax to help defray the cost of regulation, according to AMP-focused The Advisers Association (TAA).

The association’s chief executive, Neil Macdonald said it was calling for Government relief for financial advisers in the wake of what represented an exponential increase in the Australian Securities and Investments Commission (ASIC) levy.

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“As it stands, the ASIC Levy is only being allocated to those advisers and licensees who choose to remain in the industry,” Macdonald said, “By exiting advice, the major banks, despite being largely responsible for some of the poorest behaviours, are able to avoid paying their fair share. It’s simply not good enough.”

He said his organisation was suggesting imposing an exit fee on major banks and institutions that jettisoned their advice networks of around $7,400 per adviser, calculated as a three-year multiple of the current levy, and based on their adviser numbers as at the date of the Hayne Royal Commission report. 

TAA also called on the government to provide some relief to remaining advisers to address the invoices being sent to them. “This would enable the remaining advisers to pay a more reasonable amount in what is still a difficult COVID-19 environment,” Macdonald said. 

“The advisers remaining in the industry are those who are committed to the profession, who are committed to their clients and who are building strong practices that can withstand the changing times,” he said. “Expecting these advisers and their clients to just keep paying ever-increasing costs for the sins of the past, largely committed by the big end of town, is unconscionable.”

Macdonald said TAA recognised that Treasury was responsible for the costing model that resulted in the levy hike. 

“We believe Treasury needs to take another look at this model and review the downstream impact of the levy on advisers and their clients,” he said. “The normal process before implementing this kind of burden would include a stakeholder impact analysis. That may not have happened in this case and there are now some unintended consequences.”

While not against a user-pays model, Macdonald says TAA thinks the original cost of around $900 per adviser, in a normal market, was about right. “What we have now is an abnormal market where the worst users don’t have to pay because they exited. They should not be allowed to just walk away from the levy scot-free.”  

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Absolutely agree with the suggestion made by Neil. The ASIC levy for 2020 is simply iniquitous. And by the way, I can recall a conversation with an ASIC operative in the early days of the levy that it was for the year just gone (2020) and was to cover any adviser or licencee who had been providing advice for ANY PART of the year (ie2020). If that was the rule, who changed it? The big banks should pay an exit levy. And a big one.

Great point - however am I the only one wondering how many "adviser associations" there now are? Its no wonder we don't get the traction we need. Surely it is time to consolidate and speak with one (consistent) voice!

What a great idea.
However, Big Bank lover Frydenberg will NEVER go against his best buddies and biggest political donors.
Let ask Frydenberg ?
Advisers need help Treasurer, you are already helping massively your big bank buddies as you get rid of Responsible Lending.
The No. 1 RC recommendation that doesn’t require any laws to keep in place you massively push through to get rid of it and support big banks.
At same time implement ever negative Adviser RC recommendation saying the RC must be implemented.
Frydenberg is an utter disaster to Advosers and has been for 8 years.
Let’s get rid of Frydenberg !!!!

What garbage! "The advisers remaining in the industry are those who are committed to the profession"
Those who have decided to leave have never been less committed to their clients, but realise they are better off outside of a flawed system that continues to batter their confidence and contribution. Those who remain do so because they are younger and more prepared to stay in a losing fight to serve clients.
Stop blaming advisers of the past who have put up with the constant pillaging from government and ASIC and consumer groups for years. Financial planning still isn't a profession and has a long way to go if it is ever to be one.
The damage was done when banks took over the insurance companies. When it all became too hot to handle, the banks simply walked away with a mere fine and slap on the wrist. No-one went to jail. A few lost their jobs - big deal.
It was the advisors who were left to cop the public abuse through Hayne and then on top of that, the indignity of compulsorily needing to sit a totally useless exam in FASEA which is being scrapped anyway. Now advisers are being hit with higher fees. It is little wonder battle-weary advisers are leaving. But it isn't their fault!
So don't make martyrs of those who remain behind to cop more abuse. They know what they are in for and it is their choice.

The adviser levy is a forerunner to the current licencing regime being scrapped and advisers being licensed directly by ASIC. The adviser levy will not go away but, if my prediction comes to pass, licensees may no longer have the cost of maintaining said license - this will be a cost saving for licensees which would be more than replaced by the ever increasing adviser levy. The adviser levy may well also include a sum which goes into a compensation scheme of last resort (what's the point of PI insurance????!!!). The huge hikes now will be pushed through over a few years until the government gets it to the sum they are looking for to fund the scheme and subsidise ASIC (and all of their profound incompetence). I think chasing the banks for a bunch of money will not change this trajectory - it would simply be a windfall for ASIC and possibly set a precedent for future implementation. Of course, I may be wrong.

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