Despite the removal of the Financial Adviser Standards and Ethics Authority (FASEA), the loss of funding from the big institutions is still going to need to be picked up by those that remain in the industry.
FASEA’s funding was due to run out at the end of the 2020/21 financial year.
Phil Anderson, AFA general manager – policy and professionalism, said even though the disciplinary activity would be transferred to the Australian Securities and Investments Commission’s (ASIC’s) Financial Services and Credit Panel, it worked on a cost/recovery basis.
“The costs that are charged by ASIC are going to go up, not down, and we’ve got all sorts of other issues that we’ve been talking to the Government about with respect to the ASIC funding levy for 2019-20,” Anderson said.
“Given the seemingly significant increase in the spend they’ve had on enforcement activity, I don’t see this as being positive in terms of costs being charged to advisers, I think that’s only going to go up.
“Because ASIC works on a cost recovery basis, the single disciplinary body that’s housed within ASIC as part of the Financial Services and Credit Panel will be on a cost recovery basis.”
However, Anderson said Treasury was not run on a cost recovery basis, so that part could result in a reduction.
“Overall, the single disciplinary body will be doing things that weren’t being done in the past,” Anderson said.
“And we only need to go back to the previous model which was the code monitoring bodies that were part of the regime until the single disciplinary body recommendation came along, then in October 2019 the government decided not to go ahead with code monitoring bodies and to go ahead with the single disciplinary body solution – that was going to cost advisers.
“So that sort of activity will now be picked up by the single disciplinary body so there is additional costs that will flow through.”
Comments
Financial regulators should NOT be run on a cost recovery basis. At the end of the day they are supposed to be protecting consumers. But the cost recovery model leads to worse outcomes for consumers.
Highly regulated, licensed entities are the only financial advice providers who contribute to cost recovery. But most consumer harm is done by unlicensed providers. There is an incentive for regulators to focus on those entities who fund them, rather than those that cause most consumer harm. This leads to increased costs for licensed providers, which pushes more and more consumers into the dangerous clutches of unlicensed advice. It is a self defeating spiral in which consumers are the losers.
It's time for the govt to get rid of regulator "cost recovery", so that regulators can refocus their attention on properly protecting consumers.
At least with FASEA gone, we won't have to pay for their unaccountable and invisible Board!!
All call centre staff providing general advice area also covered by the laws. Therefore ASIC should be charging for each call centre person.
Add new comment