Advisers should brace for ASIC levy rise

The future of the Australian Securities and Investments Commission (ASIC) funding levy and its interplay with the levy to fund the Compensation Scheme of Last Resort (CSLR) are emerging as the key issues for financial advisers in the May Federal Budget.

With the temporary levy relief provided to financial advisers having effectively expired, the question for financial advisers is how much the levy will increase on the basis of the ASIC Cost Recovery Implementation Statement (CRIS) to be issued later this year.

However, the May Budget is expected to reflect at least a part of the Government’s thinking around the Treasury Review of the ASIC Industry Fund Model (IFM) and its interplay with the funding model for the CSLR.

Association of Financial Advisers (AFA) chief executive, Phil Anderson said that he believed advisers were likely to face “quite a marked increase” when ASIC published the next CRIS in circumstances where the pause ended.

He said that, as well, what needed to be taken into account was the fact that the funding levels identified in the CRIS would need to be serviced by a financial adviser cohort of only around 15,800.

Anderson noted that the impact of the levy necessary fund the operation of the CLSR would not become a factor for at least another 12 months.

The Government initiated a Treasury review of the ASIC industry funding model in August last year, noting that it had commenced in July 2017 and that given that it had been place for five years it was time to ensure settings remained appropriate.

The consultation process around the review closed late last year and any changes to the structure of the model are expected to be flagged in the May Budget, if not immediately implemented.