ASIC adviser levy reduced by almost $8m
The ASIC funding levy for 2022-23 has been reduced from its original estimates, after criticism that the increase to $3,217 was too high.
The industry funding levy had been frozen for two years in light of the COVID-19 pandemic but was reintroduced this year. However, advisers felt the increase from $1,142 to $3,217 was too high.
Following a change, the final amount will now be around $400 less per adviser than the original estimate and the total cost for the sector has reduced to $47.6 million, a reduction of almost $8 million.
This covers licensees that provide personal advice on relevant financial products to retail clients.
The levy for them will now be $2,818 per adviser, down from $3,217 initially forecast. This was a 180 per cent increase from the figures in 2021-22.
The levy metric is based on the number of relevant providers (within the meaning of s910A of the Corporations Act) on the Financial Advisers Register (FAR).
A statement from the Financial Advice Association of Australia (FAAA) said: “When ASIC published thir estimates for the 2022/23 year, in June, the total cost recoveries for financial advisers providing personal advice to retail clients was estimated at $55.5 million. The FAAA challenged this number and the underlying methodology used to arrive at it, as well as the lack of transparency in the calculations.
"We have consistently and strongly advocated for relief for advisers on the ASIC levy, and we are glad to see that the government has listened to those calls.”
However, the organisation said it “remained concerned” about the overall size of the levy, despite the decrease, and would continue to work with ASIC, Treasury and Minister for Financial Services Stephen Jones on improvements to the industry funding model.
Earlier this year, financial adviser Ross Smith said the levy increase had caused him to double the ongoing advice fee for his clients to meet the cost.
Smith of Shenton Limited said he has 10 advisers at his practice, which means his latest ASIC levy is $35,000 a year – triple his annual profit.
“We don’t have the cash to pay that, and it is impossible to budget for because we don’t know how much it will be. ASIC works it out based on the last financial year, but we don’t get the invoice until January next year so we can’t budget for it.
“What this means is we have to go back to our clients again and get them all to sign new forms to double their ongoing adviser services fee just to pay for the levy. All my clients are old pensioners with the age pension and a small superannuation.”