How much will advisers pay in 2021/22 levy?

The Australian Securities and Investments Commission (ASIC) has released the indicative levy for advisers in 2021/22 in its latest cost recovery implementation statement.

According to ASIC, licensees that provided personal advice to retail clients on relevant financial products would have a minimum levy of $1,500 plus $1,142 per adviser.

This was based on the adjusted number of advisers on the Financial Advisers Register (FAR) and the number of days authorised.

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There were 2,759 AFS licensees in this category with 17,402 advisers and they had an estimated budgeted cost recovery amount of $24.012 million.

ASIC said the amount was capped based on the temporary Australian financial adviser levy relief which restored the graduated component of the levy to its 2018/19 level for two years.

In 2020/21, ASIC said the estimated cost for licensees who provided personal advice to retail clients on relevant financial products was $71.3 million and had an actual cost of $25.759 million, as a result of the levy.

For licensees that provided general advice only, they had an indicative levy of $486 per year for 2021/22 while licensees who provided personal advice to retail clients on products that were not relevant financial products had an indicative levy of $118.

Regulatory costs to be recovered via industry funding levies were $332.266 million and $68.234 million was to be recovered from the financial advice sector. This was divided between $54.052 million in cost recovery levies and $14.182 million in statutory levies.

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Over the past 10 years the outcome for clients seeking advice has become significantly worse due to the incompetence, laziness and bias attitudes of ASIC. It is time that ASIC be held to the same standards they hold advisers.

They clearly have not acted in the best interests of clients.
Their actions have not left clients in a better position.
They have failed to seek alternative strategies to right their many wrongs.
Their leaders have demonstrated significant ethical failings by taking monies to pay personal expenses.
They fail to manage conflicts of interests where they refuse to review their union fund mates in the same way they review other financial service providers.
They have taken fees for no service or benefit for clients.

It is time they be held accountable, and be removed from the whole financial advice process, something they have shown to be incapable of properly regulating. This said, why are advisers still expected to pay/fund ASIC?

Last Friday, I submitted a "Quality of Advice" submission to Treasury in which I advocated that functionality for advisers leads to functionality for 'Quality of Advice', but the Treasury adopting David Murray AO's formula was an anticompetitive effect on independent financial advisers that caused the professional body to reduce from 28,000, predicted to drop to 15,000 by 2025 to service a population of 26 million. An actuarial model would probably project that adequate financial advice services should be administered by 1% of population or 260,000, not 15,000. I advocated that there should be a Financial Advisers Ombudsman to support financial advisers to effectively administer 'Quality of Advice' to deal with individual cases of abuse or neglect, as the ASIC Industry Funding Levy is not audited by financial advisers and costs are probably overloaded by the big end of town Law firms gouging ASIC doing enforcement against financial institutions. Industry organisation needs to change from hierarchical vertical coordination abuse from Politicians, Public Service and financial institutions, to horizontal coordination in equivalence of authority that is inclusive of Financial Advisers with a trusted industry association being the Peak Coordinator and an independent Financial Advisers Ombudsman. If you want to read a copy of submission, send an email to [email protected] which you can take to the office your Federal member, sit down over a coffee and discuss it with them. This should go into the political policy agenda for structural reform in industry organisation.

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