The Financial Planning Association of Australia (FPA) has urged the Australian Securities and Investments Commission (ASIC) to reconsider a 38 percent increase to its industry funding levy for financial advisers as the country enters its first recession in 29 years.
A statement from the FPA says that the corporate regulator has released, for consultation, its Cost Recovery Implementation Statement 2019-20 (CRIS), which has been prepared based on its planned regulatory work and budgeted allocation of costs at the beginning of the 2019–20 year.
The FPA says that ASIC estimates that the industry funding levy for 2019-20 will be $1,571 per adviser, a 38 percent increase on the previous year.
It notes that the corporate watchdog is 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 percent cost increase per adviser is excessive and last financial year the final levy amount was even higher than the estimate, the statement says.
Dante De Gori, CEO of the FPA, described the increased levy as “fee gouging” and says it is an unreasonable demand on financial advisers given the current economic environment.
“Financial planners were hit with a 22 percent increase in 2017-18. Now ASIC estimates the levy will increase by 38 percent 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 says.
He says that advisers are already under tremendous pressure:
- To meet new education requirements
- Await critical outcomes on the FASEA extension from “…an unpredictable Parliament”
- Overhaul their business models to meet regulatory requirements.
And adds that as small businesses, advice practices also face the challenges that Covid-19 has created for the wider SME sector.
“ASIC’s fee hike does nothing to support them or their clients during this difficult time.”
Measures to make advice more accessible to be removed
The FPA statement says that ASIC also announced that measures designed to make financial advice more accessible to Australians during the Covid-19 pandemic will be removed.
It says that ASIC has set an end date of 15 October for the Covid-19 relief measures including:
- Relief to facilitate advice to individuals financially affected by Covid-19 about early access to superannuation
- Relief extending the period for giving time-critical Statements of Advice
- Relief to allow a Record of Advice to be given instead of a Statement of Advice in certain circumstances
De Gori says the industry was not consulted on the decision.
“These relief measures have made advice more affordable for Australians when they need it most by reducing costs among financial planning practices,” he says.
The statement notes that ASIC had asked the FPA to canvas its members on their use of these relief measures and that it is still in the process of compiling this feedback.
“It is too early to understand how long these measures will be needed and far too soon to be setting an end date, given that the feedback process is yet to be completed,” De Gori says.