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.
“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.”