Planning and accounting groups unite against ASIC levy rise

The Australian Securities and Investments Commission (ASIC) has succeeded in uniting the industry against its move to hike regulatory levies.

The regulator has managed to bring together Chartered Accountants Australia and New Zealand, CPA Australia, the Financial Planning Association (FPA) and the Institute of Public Accountants (IPA) all of whom have said the steam levy increases will hasten the exodus of advisers from the industry.

In a joint statement issued today noted that the ASIC levy increases were occurring despite financial adviser numbers nose-diving and called on the government to cancel or reduce the increase.

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“The fee hike, published by ASIC yesterday, represents an increase of 160% over two years for financial advisers. Meanwhile, the number of financial advisers has fallen from around 25,200 in 2017/18 to approximately 21,200 now,” the statement said. “The total cost levied by ASIC is now $1,500 per retail advice licence, plus an additional $2,426 per authorised adviser under the licence. This means a sole practitioner holding a limited licence can expect to be hit with a $3,926 bill from ASIC within weeks.”

The organisations said their top five concerns were:

  1. The model doesn’t account for changing industry dynamics.
  2. The model is contributing to the decline in financial adviser numbers.
  3. Remaining participants are left to shoulder a disproportionate cost burden.
  4. ASIC’s preliminary cost estimates are often inaccurate and hence difficult to budget for.
  5. Penalties and fines are diverted to consolidated revenue rather than off-setting ASIC’s costs.

The group noted that the industry funding model has not changed despite major shifts in the financial advice sector. For example, banks have largely ceased operating financial advice businesses. Yet ASIC’s budget to oversee financial advisers has increased from $25.6 million in 2017/18 to more than $56 million in 2019/20. This is largely due to supervision and remediation of historic deficiencies in the banks.

“Declining adviser numbers mean that remaining participants must shoulder a heavier proportion of the total cost. This is impacting the viability of remaining businesses. Ultimately, this has flow on-effects for competition and the accessibility and affordability of financial advice,” they said.

“ASIC provides an estimate for each year’s industry levy approximately six months before the final amounts are invoiced. Experience has shown that these are often inaccurate. This makes it difficult for financial advice businesses to budget for their operating costs.

“Fines and penalties go into consolidated revenue. Retaining these would help off-set ASIC’s operating costs and put a stop to the existing cycle of levy increases.”

The group is calling for the following action in response to the fee increase:

  1. The government should immediately review the industry funding model.
  2. The government should reduce or remove the latest industry funding levy increase.
  3. ASIC should be properly funded from consolidated revenue to undertake its functions.
  4. ASIC’s industry funding levy must reflect the cost of regulation and not fund other budgetary measures.

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Around 60% of ASIC revenue pre-levy is returned to Commonbwealth consolidated revenue as a dividend, about $600million. On a user cost recovery basis, supposedly the model for bodies such as ASIC, there was never a need for an additional levy and there is no need for an increase. What we need is the cover-up of this undisclosed taxation to be fully revealed and accounted for by the government.

agree Patrick, the neo conservatives decided that government departments should run as businesses themselves. They are now a cost and a policy competitor to private business, a combatant, a long way from what governments were meant to do for people.

Am impressed they united, how refreshing!

ASIC has squandered and wasted so much funding - not just on corrupt Shipton Crennan payments (plus who knows how many more underlings also got extra non-taxable 'fringe benefits' compliments of a wasteful organisation), but also dolling out any penalty funds they received to left wing organisations like CHOICE, AIST etc etc.

If funding is an issue, they should be keeping the penalty money in-house to further fund better management and guidance for good planners and firms. At the moment, it is the reverse; the good planner spay exorbitant fees to fund ASIC against bad planners. Surely this should be reversed FFS?????

Fee for Service?????

Haha, yeah missed an N in that case - but my acronym wasn't as polite as your suggestion :)

I wonder if you added up all the payments by ASIC to uni's etc to fabricate 'reports' to back their anti-planner stance & actions, the man hours spent by the corrupt ASIC employees to orchestrate actions behind the scenes (FASEA etc) and also to falsify information in-house (LIF, SMSF 'findings' to Parliament etc), what the total costs would come to and hence the budgetary savings if they just did as they were supposed to i.e. be an unbiased regulator?

What, you mean ASIC should exercise sound accounting principles?
The income you earn from your activities should be matched with the expenses you incur?
What a revelation?
So ASIC spends money to collect fines and penalties and offsets that expense with the fines and penalties it collects.
What a great approach?
Alternatively just "fine" everyone who is getting on with doing the job in a compliant way with an annual supervisory fee while the crooks simply shut down and pop up somewhere else.

Good, but will likely fall on deaf ears! Perhaps ASIC can also stop funding consumer groups such as Choice, which would be good first step in helping keep costs down!

Choice ceased to be a consumer group about 10 years ago. They are now a political activist group. Most of their activity in relation to financial services has actually made things worse for consumers.

Dear ASIC, we Love (Hate) you soooooo much, you are totally corrupt and anti Real Advisers and the ultimate insult to real advisers is we have to pay you for your Regulatory Capture Corrupt anti Adviser treatment.
Let ASIC try to close down the whole Industry.
We love paying for:
- Master Shiptons personal Tax Advice of $128K
- Paid for FARSEA Comment bribes to so called Ethical Academics, that are totally conflicted.
- SMSF Cost Fact Sheets, that are proved totally FALSE and misleading by ASIC to promote Industry Super.
- Advisers get to pay for ASIC chasing Fraudulent NON Advisers Like Melissa Caddick.
- We get to Pay for ASIC chasing the Banks for letting them get away for 10 years of Fee for No Service. When ASIC knew this was occurring for at least 10 years pre RC and did NOTHING about it.
- We get to pay for complete 2nd layer AFSL compliance FDS Optin at Admin Platform Level.
- We get to pay for so called How to Reduce Advice Costs ASIC reviews, when ASIC continually increase Advise costs and fain any knowledge or blame AFSL's for all the problems. ITS YOU ASIC.
Time to say NO loud and clear and refuse to pay !!!!!!!!!!

I though ASIC disappeared during last year and helped out Industry Super (opps, COVID issues) so basically had more than half of the year MIA - so why the increase ASIC?

How much ASIC levy did Melissa Caddick pay? Zero because she wasn't licensed.

Why didn't ASIC do something to stop Melissa Caddick (and thousands of other unlicensed advice providers) from harming consumers? Because ASIC doesn't get any revenue from them.

The system is deeply flawed when an agency that is supposed to protect consumers is reliant on revenue from licensed providers only. If its job is to protect consumers it should be funded by consumers (ie taxpayers). Maybe then ASIC will do its job properly.

Funny how the FPA can work with CPA Australia, but actual financial planning bodies and the FPA itself, want nothing to do with each other. Classic FPA putting the needs of itself first again. We see what happens when the AIOFP, the Stockbrokers and Financial Advisers Association, FINSIA and the SMSFA can get together to get a FASEA extension, but we're drowning in red tape because of self interested associations unwilling to be united.

It just came to me - it obvious - ASIC needs Annual Opt-in and FDS, informed consent (no more of this inaccurate estimates) and BID.
For the money ASIC spends - what clients did they protect from harm? Melissa Caddick?

Wasn't ASIC out of action for 6 months last year due to covid? So all these public servants sat around doing what exactly? I know they have themselves a bonus and a pay rise though. Not a good look for them considering the increase in levy to advisers.

That's nothing. As a small derivatives dealer we've had to deal with the massive hit of over $40,000 for our ASIC levy. That's on top of compulsory trade reporting at $50-60k that was introduced a few years ago. Those costs have already forced us to reduce our work force.
A recent email from ASIC seems to suggest our levy alone this year may be over $100k, on top of the 400% hike in compulsory indemnity insurance means in the last 4 or 5 years, we've had a quarter million in compliance fees added on to our expenses.

Australia is extremely bad for business.

Australia is also extremely bad for consumers. The excessive fees and regulatory burden on companies that do the right thing makes it harder for consumers to access their services. It also encourages companies that do the wrong thing to operate outside the regulations, where it is much cheaper and simpler, and they can service all those consumers who have been forced away from legitimate providers. Consumers lose out at every turn.

The price we pay for an industry that failed to self regulate. AFA, FPA, banks and major licensees are responsible for this.

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