1500 fewer advisers, 981 fewer AFSLs sink ASIC levy formula
The likelihood of the pause in Australian Securities and Investments Commission (ASIC) levy being extended beyond its end-point in August, next year, is looking increasingly remote as the Government looks to contain Budget costs.
However, financial advice licensees may get at least some relief beyond the second half of next year via changes to the underlying methodology.
This is because the current methodology underpinning the financial advice component of the ASIC Industry Funding model is set for change in circumstances where the declining number of financial advisers makes the existing formula no longer fit for purpose.
This much was made clear by the release of ASIC’s Latest Cost Recovery Implementation Statement covering its activities for 2021-22 which is based on a financial planning profession boasting 2,759 licensees with 17,402 advisers.
The reality, however, is that financial adviser numbers are now sitting at around 15,900 while, according to WealthData, the number of licensees is sitting at 1814.
Given that the levy metric is based on the number of “relevant providers”, then it is clear that the levy model which was designed for a profession dominated by the major banks and AMP is no longer fit for purpose.
Treasury is currently undertaking a review of the ASIC Industry Funding Model to ensure it remains fit for purpose, but even the most basic analysis of adviser numbers and licensees underscores the fact that it is not.
This much was made clear by the Financial Planning Association (FPA) in its submission responding to ASIC’s initial consultation around the levy when it pointed to the impact of the banks and other large institutions exiting the financial advice arena.
“These large licensees have progressively and significantly reduced their footprint in the advice market since 2015,” the FPA submission said.
It then pointed to the fact that AMP, ANZ, the Commonwealth Bank, Macquarie, NAB and Westpac accounted for 8,952 advisers in 2015 but accounted for just 1,217 in 2022, with AMP having 1,035 wile Macquarie had 182.
“The exodus of these licensees from the personal financial advice to retail clients on relevant financial products subsector has had a market impact on the advice market,” the FPA said.
“Analysing data from the Productivity Commission and the ASIC Financial Adviser Register (FAR) shows the growing trend of small businesses who hold and operate their own AFSL – the per centage of advice licensees operating a firm with less than 10 financial advisers increased from 78% in 2017 prior to the Royal Commission, to 88% in August 2021.
The Treasury is expected to complete its review of the ASIC levy funding model before the end of the year, with any changes to be announced in the May Budget.
The Treasury has made clear that the review will have no impact on ASIC’s 2021-22 levy process.
Hey ASIC, as Advisers are your litigation funders, where is our 50% share of the hundreds of $$$$millions of fines / revenue raised ?
ASIC is not only inept & corrupt, it is broken and needs replacing.
I will never forgive Josh Frydenberg, Jane Hume or the Liberal party for introducing this great big new tax (#ASIClevy).
Imagine being so stupid as to allow a bloated government bureaucracy to operate however they want and simply invoice small businesses for the costs. It is the polar opposite of how the Liberal Party should be. Hopefully Labor will become the political party for small business, because if they don’t , then there is no one.
Nothing like some double taxation! AND ASIC want to put the boot in with the CSLR so they can stick the costs of Dixon Advisory onto Advisers.
If we were to tell our clients to invest thousands of dollars a year into an investment which will give them absolutely no return whatsoever, we would all be in prison.
Yet that is exactly what the government is not only telling us to do, but forcing us to do. 🙁