The Financial Planning Association (FPA) has accused the Australian Securities and Investments Commission (ASIC) of seeking to "gouge" financial planners via new industry cost recovery mechanisms which would increase the industry funding levy by 38%.
ASIC released the consultation paper around its Cost Recovery Implementation statement on Friday, and while claiming the costs were only a guide immediately elicited an angry response from the FPA.
The ASIC document placed cost recovery levies to be raised with respect to financial advice at $29.850 million, alongside statutory levies for the sector of $7.549 million giving a total levy of $37.399 million.
The FPA immediately urged the regulator to reconsider the levy increase pointing out that it represented $1.571 per adviser on the basis of ASIC looking to recoup $40.17 million from 3,051 AFS licensees with 22,652 advisers.
“While ASIC states that the indicative levies for 2019–20 are an estimate, the FPA believes a 38% cost increase per adviser is excessive and last financial year the final levy amount was even higher than the estimate,” the FPA said.
FPA chief executive, Dante De Gori, said the proposed increased amounted “fee gouging” and represented an unreasonable demand of financial planners given the current economic environment.
“Financial planners were hit with a 22% increase in 2017-18. Now ASIC estimates the levy will increase by 38% for 2019-20. No matter which way you look at this, it is excessive at a time when financial planning professionals are working hard to help their clients through extraordinary circumstances,” he said.
“Financial planners themselves are already under tremendous pressure to meet new education requirements, await critical outcomes on the FASEA extension from an unpredictable parliament and overhaul their business models to meet regulatory requirements.”
Comments
Too little too late from the FPA however if ever an example of Fee for No Service exists it is ASIC and the latest Fee recovery paper.
They look to drive advisers out of the industry and then slug those that are left with higher and higher charges when we are all struggling to keep businesses going.
Between ASIC and AFCA the industry will be driven to its knees and forced to endure costs that will force many to close.
This is obviously due to the banks, thousands of advisers and other entities having exited the industry and so ASIC is now spreading the cost amongst those left standing which will possibly push many remaining advisory businesses over the edge into shutdown. This is nothing short of "Death By Financial and Regulatory Strangulation".
Fee gouging - tick
Fee gouging = nails in coffins - tick
The Government giveth and the Government taketh away - tick
The only way to address this is for the FPA to arrange a boycott of fees. The issue is irrelevant till it hits the front page, and as we saw with the BLM protests, if they can't arrest everyone, they'll arrest no-one.
This was always coming. ASIC is free to charge whatever it wants. In a few years it will be close to $10k per adviser, mark my words.
How to strangle to a golden goose!
Leave it to those who have never worked a day in their lives for an income; politicians and ASIC.
They said their fees were going down. They lied !
Agree - another nail in the coffin of financial advice by ASIC. It is absurd that financial advisers should be paying this levy in the first place. What other industry has to pay for a government department to operate. How about a levy on all lawyers to pay for the cost of operating the courts? When there is no advisers left. Who will ASIC charge then?
ASIC must be transparent in how the fee is determined, what services they offer each adviser, why the fee is in excess of CPI etc.
Perhaps ASIC's performance needs to be subject to scrutiny regarding operational efficiency?
ASIC are abusing their position because they can.
There is no one to keep them honest. They have been vocal in determining this is an issue with advisers, if that is the case why would they be any different? Their remuneration is linked to penalising advisers and fines.
Adviser numbers are reducing dramatically, so the fees will actually be far higher as they're aiming for a gross figure, not a per adviser figure.
If their costs are increasing, why then did they pay the millions in penalty money to left wing red rag flying organisations like Choice etc? Surely this needs to be investigated?
Good on you FPA, this is the type of action we need you to do ferociously and virulently on all our behalf both to ASIC and as a political lobby. We also need unity with AFA also coming out swinging over this issue.
FPA should have done this a year ago. Too little, too late. Meanwhile, the intrafund advisers are strangling the FPA to death, not unlike Adem Somyurek. They're all in their same corrupt boat together (along with union supporters inside the regulator).
We all knew this was coming, they set this fee on the understanding that the banks would still be in advice and be paying it. So those of us left, the ones doing the extra study, and the exam, trying to abide by a unworkable coe, now we get to subsidise ASICS fees for the ones that have exited. This is outright unfair. Imagine we lose clients, then we up the ASF on the rest so that we can keep the same level of income...it would be front page news and we would be slaughtered in the press. Wake up ASIC YOU ARE RIPPING US OFF!
Not a bad game hey. Remove yourselves from the Public Services Act so you can pay yourselves whatever you want, and then send the bill to Advisers.
If there are less Advisers in the Industry then shouldn't the fee be smaller?
Good luck to the last man (adviser) standing because ASIC will justify their anticipated cost of prosecuting you with what ever adviser levy they think is appropriate.
that's right and then when there are only 10 advisers left, James Shipton will say, we want to engage with you and find out why you have all left.
ha ha, this couldn't get funnier btw, all the politicians know advisers are leaving in droves, yet, they are not doing anything about it.
Why would they do something about it? They don't care if the industry ceased to exist overnight.
ASIC will use adviser paid fees to prosecute advisers! HA - it's a living!
I wonder if ASIC can see the irony that their 'customers' are paying them to prosecute them out of existence, thereby costing ASIC employee's themselves their jobs? You might be lucky enough to see your local ASIC officer down at Centrelink when you are both there collecting the dole.
If you want to do an interesting calculation, google all the Fed Govt Departmental Annual Reports, & add up all the combined salaries they are charging taxpayers each year. We are talking over 1 billion pa. It cost taxpayers $140 million pa just to staff Treasury alone. It's obscene.
The FPA are the experts at gouging fees. 23 years l paid fees for no service.
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