The Australian Government has announced “temporary and targeted” relief for financial advisers by reducing the cost recovery levies charged by ASIC.
A statement from Treasurer Josh Frydenberg and Senator Jane Hume says the relief will see ASIC levies charged for personal advice to retail clients restored to their 2018-19 level of $1,142 per adviser for the next two years (relating to 2020-21 and 2021-22). The flat per licensee charge will remain at $1,500.
The statement says this represents “…a substantial reduction relative to the level estimated in ASIC’s 2020-21 Cost Recovery Implementation Statement of $3,138 per adviser.
“The sub-sector as a whole will pay an estimated $46 million less in ASIC Levies in 2020-21 alone, with further savings flowing in 2021-22.”
the freeze “…will provide financial advisers with the certainty they need over the next two years…”
The Ministers add that the freeze in the per adviser levy “…will provide financial advisers with the certainty they need over the next two years to deal with the impacts of Covid-19 and further regulatory reforms making their way through the Parliament, including the introduction of a Single Disciplinary Body and a Compensation Scheme of Last Resort.”
They note that Treasury will also review the ASIC Industry Funding Model while this temporary relief is in place, “…to ensure it remains fit for purpose in the longer term given structural changes taking place in the advice industry.”
This review will commence in 2022 and will be undertaken in consultation with the Department of Finance and ASIC.
The statement says that as implementation of the recommendations of the Financial Services Royal Commission continues, this reduction [in the levy] will help ensure Australians can continue to have access to affordable and professional financial advice.
Industry association’s welcome announcement
Meanwhile two industry associations have welcomed the Government’s decision on the ASIC industry funding and thanked the Government for listening to their concerns and those of their members. (See: AFA Slams ASIC Funding Levy Increase and Call for Review of ‘Unsustainable’ ASIC Levy.)
The AFA’s National President, Michael Nowak says, in a statement, that its advocacy on behalf of its members has helped win the “major concession from the Government with the proposed trebling of the ASIC Funding Levy on hold”.
He says too that the review of the ASIC industry funding model to ensure that it remains fit-for-purpose “… is a much-needed move in the right direction”.
“This is a significant first step in starting to address the practical impact of the reforms on the ability of financial advisers to offer everyday Australians sound financial advice…,” says Nowak.
THE FPA’s CEO Dante De Gori says the news will provide some certainty and stability to financial advisers, “allowing them to provide more affordable financial advice to Australians”.
“The FPA worked with and would like to thank our members for echoing our concerns about the current formula and their direct engagement with their local members of Parliament over the past two years,” he says in a statement.
De Gori is looking forward to continuing conversations with the Government on the industry funding model to improve access to affordable and professional financial advice.