ASIC levy increase will cause more practices to close: FPA

The current formula for the Australian Securities and Investments Commission (ASIC) levy is not equitable or sustainable, and must be reviewed immediately before more financial planning practices are forced to close, according to the Financial Planning Association of Australia (FPA).

ASIC released its Cost Recovery Implementation Statement (CRIS) for 2020-21, which would charge licensees $1,500 plus $3,138 per financial adviser, an increase of $712 over the previous financial year.

Dante De Gori, FPA chief executive, said the ASIC levy for financial planners had gone up by over 340% in the last four years and was on an unsustainable trajectory.

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“In light of extended lockdowns across the nation, the FPA questions the validity and timing of the increase, with millions of Australians unable to work and some businesses struggling to keep staff employed,” De Gori said.

“The FPA strongly recommends that the ASIC industry levy be reviewed immediately to provide a more equitable and predictable annual levy, and for the year-on-year increases to better reflect the capacity of the financial planning profession.”

The FPA acknowledged the need for an industry-funded regulatory model but said two major issues had become apparent since the levy was first applied in the 2017-2018 fiscal year.

“Firstly, the levy amount each year has proved to be unpredictable, which makes it practically impossible for a financial planner to effectively budget for this business cost, particularly by a profession that is dominated by small and medium-sized businesses,” De Gori said.

“The FPA notes last year's estimate was wrong by 54% (i.e. between the CRIS and the final) so the actual levy figure could be significantly higher.

“Secondly, the levy has been increasing at a dramatic rate that far surpasses the rate of revenue growth for most financial planning businesses or increases to ASIC’s budget.”

De Gori said this was being compounded as the number of registered financial planners in Australia had continued to decline.

“As a first step in addressing these challenges of predictability and dramatic levy increases, we call for the Government to urgently and immediately undertake a review of the ASIC industry levy,” De Gori said.

“It has been four years since the levy was first introduced, and it is now critical to review its implementation and impact on the financial services sector.

“Making financial advice more affordable for all Australians starts with making financial planning more affordable to practice.”

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Frydenbergs hate of Advisers and massive double taxation to pay for out of control and above my pay grade Ms Press and ASIC is a total disaster.
Out with Frydenberg
Out with Ms Above my pay grade Press
Or a total revolt and the whole Advice industry simply refuse to pay ASICs double taxation levy.

The Regulator and Government are so out of touch with the industry and real people and this is just another example of their up-yours attitude to those left in the industry from the exodus of the institutions that both the FPA and ASIC pandered to and failed us all. The issue is not just the unsustainable 30% increase but the real threat based on the past that when the figure is "finalised" it will be closer to $4000.
What do we get for our $4k - nothing - when the new Fee Disclosure and Fee Consent legislation was due to commence on 1/7/2021 it wasn't until the week before that "clarification" and "guidance" was finally issued. There is no service for the fees we pay, the website and portals are a complete joke and the remainder of the industry is still just funding the endless legal attacks on the institutions who pay a fine that goes to the Governments consolidated revenue. We are simply paying twice as the institutions pass on the cost to us as consumers and we pay the cost of the litigation.
It is no wonder advice costs are spiraling out of reach of clients who need it and the numbers in the industry are leaving in droves.
Good to see though the FPA coming in late as usual - protecting their brand rather than members.

This unwinding of the industry started with how easily we were rolled over on the LIF insurance commissions takedown. That they won't release that report/review publicly is telling. But it won't be for 5 years on review, Freedom of Information, when many of those responsible have moved on on their careers, or have retired on large CSS defined pensions, funded by the taxpayer contribution to the Future Fund - that the damage they have done will be apparent to all, not just planners - sadly, they will pay no price.

"Making financial advice more affordable for all Australians starts with making financial planning more affordable to practice." What a shame it was your parting comment Dante, it was probably your finest.

Our small company paid $110,000 to ASIC last year up from $45,000 the year before. We will have trouble surviving another increase without giving our clients substantially worse conditions. Screw the LNP. They are BAD for business.

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