IPA joins industry fight against ‘shameful’ ASIC advice fee hike
The Institute of Public Accountants has united with a group of industry bodies against a 160 per cent increase in adviser licence fees as part of the ASIC industry funding model, referring to the move as “shameful”.
The total cost levied by ASIC is now $1,500 per retail advice licence, plus an additional $2,426 per authorised adviser under the licence, meaning a sole practitioner holding a limited licence can expect to be hit with a $3,926 bill from ASIC within weeks.
The IPA joined Chartered Accountants Australia and New Zealand, CPA Australia, Financial Planning Association of Australia and the SMSF Association in saying the steep increase highlights serious issues with the funding model and will hasten the exodus of advisers from the industry.
The group noted that the industry funding model has not changed despite major shifts in the financial advice sector.
For example, it said banks have largely ceased operating financial advice businesses, yet ASIC’s budget to oversee financial advisers has increased from $25.6 million in 2017-18 to more than $56 million in 2019-20.
“This is largely due to supervision and remediation of historic deficiencies in the banks. Declining adviser numbers mean that remaining participants must shoulder a heavier proportion of the total cost,” the group said.
“This is impacting the viability of remaining businesses. Ultimately, this has flow on effects for competition and the accessibility and affordability of financial advice.”
Further, the group noted that ASIC provides an estimate for each year’s industry levy approximately six months before the final amounts are invoiced, but experience has shown that these are often inaccurate.
As a result, this makes it difficult for financial advice businesses to budget for their operating costs.
Instead, the group suggested that fines and penalties go into consolidated revenue.
“Retaining these would help off-set ASIC’s operating costs and put a stop to the existing cycle of levy increases,” it said.
The group’s recommendations
The group is calling for the following action in response to the fee increase:
- The government should immediately review the industry funding model.
- The government should reduce or remove the latest industry funding levy increase.
- ASIC should be properly funded from consolidated revenue to undertake its functions.
- ASIC’s industry funding levy must reflect the cost of regulation and not fund other budgetary measures.