Financial advisers should be bracing for another levy to fund the Financial Adviser Standards and Ethics Authority (FASEA) in next year’s Federal Budget because most of the major banks will no longer be there to do so.
Over the past three years the bulk of FASEA’s funding has come from seven of the banks plus AMP, but only AMP and National Australia Bank (NAB) still have significant current wealth management interests in the wake of ANZ, Westpac, Suncorp and Bendigo largely exiting the space and with the Commonwealth Bank in the process of doing so.
The FASEA funding arrangements put in place by the Treasury saw ANZ, Bendigo, the Commonwealth Bank, Macquarie Equities, NAB, Suncorp, Westpac and AMP providing total funding of $3.9 million a year but the arrangement will expire in May.
However the Government has yet to flag how it intends to fund FASEA in the 2020-21 Budget year in circumstances where it has also yet to outline either the structure or the funding model for the single disciplinary body recommended in the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The future funding structure is also being viewed against the background of the decision by the Financial Planning Association (FPA), the Association of Financial Advisers (AFA), the SMSF Association and other members of a consortium not to proceed with establishing a FASEA code-monitoring authority.
While the members of the industry consortium would have funded establishment of the code-monitoring authority, its ongoing operational expenses were to be funded by membership fees from financial advisers.