Advisers get token concessions from ASIC levy review

Mike Taylor

Managing Editor/Publisher, Financial Newswire

28 June 2023

Financial advisers scored a small but nonetheless significant win from the Government’s review of the Australian Securities and Investments Commission (ASIC) industry funding model – they will not be solely responsible for funding the regulator’s pursuit of unlicensed advisers.

In future, the costs of ASIC pursuing unlicensed activity will be levied from all segments of the financial services industry regulated by ASIC.

The Review was never going to recommend an extension of the COVID-19 related freeze on the ASIC levy and, if it had, the Government would have rejected the recommendation because of a tight Budget.

It argued that, in any case, without the freeze financial advises would have paid $2,971 in 2020-2021 and this would have increased to $3,021 for 2021-22

The Review fell well short of adviser expectations because it did virtually nothing to preclude a repeat of the circumstances under which financial advisers were levied for the costs of ASIC pursuing Westpac/BT over advice surrounding superannuation.

In short, it declined to change the circumstances under which small financial planning licensees find themselves being levied for the costs of ASIC pursuing a large entity such as a bank or insurer for the somewhat lame reason that the administrative costs and complexity would outweigh the benefits.

“The Review finds that the recovery of enforcement costs solely from entities subject to enforcement activity would introduce additional complexity and administrative costs into the model that would likely outweigh the benefits of more targeted recovery,” it said.

“However, where possible, ASIC does seek to recover certain enforcement costs from entities subject to enforcement,” the Review claimed.

On the question unlicensed activity, the Review listed as a key finding that: “The recovery of costs relating to unlicensed conduct does not align with the principle that those entities in sub-sectors who cause the need for ASIC’s regulatory effort should be charged for it and should be recovered based on the regulated population that benefits from this regulatory activity”.

“The Review finds that the benefits of this regulatory activity extend beyond the sub-sector and to the whole sector itself and should be recovered accordingly.”