Call for licensee levy increase to address cost asymmetry

8 February 2024
| By Laura Dew |
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A financial adviser has launched a petition for the portion the ASIC levy paid by licensees to be increased ahead of the next levy schedule.

Matt Grant, partner and financial planner at Voyage Financial in Fremantle, Western Australia, believes licensees should bear more of the levy burden rather than advisers.

He is concerned by the significant increase in levy for advisers while the amount payable by licensees of $1,500 remains unchanged, despite the costs now being borne by far fewer advisers, thanks to the adviser exodus.

Currently, there are around 15,646 financial advisers, but the number of AFSLs is increasing as people opt to leave large licensees and set up their own, which Grant feels will worsen the situation. 

The latest ASIC stats in its summary of 202223 levies show there is a minimum levy of $1,500 for licensees plus $2,818 per adviser for licensees that provide personal advice to retail clients on relevant financial products. 

This is up from $1,142 per adviser previously, although it is a reduction from a previous figure of $3,217, which was reduced due to the industry backlash

Grant said: “We are concerned by the significant cost asymmetry that has emerged between individual financial advisers and AFSL holders. It is AFSL holders who are responsible for the conduct of the advisers who operate under their licences, and who must ensure that the financial services their advisers are authorised to provide are delivered honestly, fairly and in accordance with the law. 

“We submit that ASIC’s main regulatory focus (and therefore its costs) relate to AFSLs rather than individual advisers.

“We therefore ask Minister Stephen Jones to, by regulation, increase the minimum amount payable by an AFSL from its current fixed amount of $1,500 before invoices for the levy are issued in early 2024 to ensure equitable outcomes for the financial advice sector.”

He proposed a model where 75 per cent is paid by the licensee, who he said is the entity that ASIC primarily deals with, and 25 per cent by the adviser. This would see the levy move to $12,905 per AFSL and $772 per adviser.

If it moves to a 50:50 ratio, the proportion will be $8,603 per AFSL and $1,544 per adviser.

Invoices are due to be sent between January and March each year, and are due for payment within 30 business days. 

The closing date for signatures to Fairer outcomes for the ASIC Supervisory Cost Recovery Levy
Petition is on Thursday, 15 February.

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Submitted by Not Sure About That on Thu, 2024-02-08 08:57

All this is, is a campaign run by larger dealer groups to try and stem the flow of losses to self-licensing. The dealer groups have created this campaign and are using their puppet advisers to support this proposal out of their own self-interest. If any adviser believes that a deal group would happily absorb the increased ASIC fee without passing onto the adviser / CAR needs to have their head read... The only thing this will do is reduce ASIC fees and increase dealer fees further. People should stop wasting time trying to put lipstick on pigs and focus on addressing the real issues in this industry.

Submitted by Really? on Thu, 2024-02-08 09:01

Licensees are going broke - did you not know this? All the trails and back hand revenue they got from product providers that built their business is gone. If you charge this to a licensee thy will put up your cost anyway - its very simple to understand this. What needs to happen is: We do not fund ASIC full stop. NO LEVY. Besides this article does not help self licensed people which is where the industry is headed.

Submitted by Bemused on Thu, 2024-02-08 09:04

Surely the licensee would pay the levy for the adviser in most instances.

The proposed model 75:25 would increase the total cost for a 2 adviser licensee from $7,136 to $14,449.

Great way to screw the small Licensees.

Submitted by Angus Stephen on Thu, 2024-02-08 09:12

I suggest Matt further reflect on his proposal lest he look like a fool. This is akin to shuffling deckchairs on the Titanic. It is the overall quantum of the fee rather than who pays it that is the issue. If Licensee's wear more of the cost, they'll simply adjust the fees they charge the authorised representatives to reflect their increased costs. In fact, it might cost advisers more if they have to load up the fee to deal with the unpredictable nature of the fee or add a profit margin to their costs. In my opinion, our colleague in the West should be more concerned with AFSL holders and Advisers funding ASIC's action against unlicensed individuals and organisations as if we are some sort of benevolent litigation funding body.

Submitted by Jack on Thu, 2024-02-08 10:24

This seems dumb - wouldn't additional levies just be passed on to the advisers...

Submitted by Jack Doff on Thu, 2024-02-08 10:57

Sorry Matt, but you obviously don't run your own AFSL. For our 2 planner practice, you are proposing an increase of $5,653 for next year on top of the current $3,300 increase this year.
A much better plan would be for all of the fines to go towards covering the running costs instead of being sucked up by Treasury. Then the adviser levies would reflect the actual shortfall in ASIC funding their running costs.

Submitted by Tman on Thu, 2024-02-08 12:31

You'd be stuffed if you run your own AFSL and you are the sole adviser then hey

Submitted by Adviser.Michael on Thu, 2024-02-08 17:19

A move in the right direction
For licensees with more than five advisers, it actually makes good sense regardless of whether the dealer passes it on to advisers.

For example, if a dealer is charged $12,905 and has 200 advisers this would work out to just $615 per adviser plus adviser levy of $772 = $1,383. For a team of six advisers this would be $2,150 + $772 adviser levy = $2,922.

I understand this is not ideal for smaller groups or smaller writers and believe the fairest and most equitable solution would be a levy of say, approximately 0.5% of fees paid by the dealer to adviser. For example, $500 per $100,000 of fees generated.

The best solution is to abolish the levy all together.

But for now, the proposal is better than the current system. To sign the petition, click on the following link:

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