ASIC spent $4.488m pursuing unlicensed advice
The Australian Securities and Investments Commission (ASIC) says it spent $4.488 million pursuing unlicensed operators in the financial advice sector in the 2022-23 financial year.
At the same time as financial advisers have expressed concern that the cost of pursuing unlicensed financial advice will be added to the total of their ASIC levy, the regulator has revealed its approach and the cost of its activities to Senate Estimates.
What is more, it has acknowledged just how many tip-offs about unlicensed advice come from legitimate financial advisers.
Answering questions on notice from Victorian Liberal Senator and former Minister for Financial Services, Jane Hume, ASIC said it estimated that “12% of reports of alleged misconduct received by ASIC in financial year 2022-2023 about unlicensed financial services were lodged by financial industry professionals”.
“ASIC receives and records information about the reporter of alleged misconduct, such as being a financial industry professional, through our online electronic report of misconduct form,” the regulator said. “Where reports are received by other means, such as hard copy or email, our system does not record this reporter information.”
“For the financial year 2022-2023, ASIC received 563 reports of alleged misconduct about unlicensed financial services. Of these, 414 reports were lodged online and 12% of the reporters identified themselves as being financial industry professionals.”
Hume had asked ASIC to quantify the cost of enforcement for unlicensed operators providing financial advice during the last cost recovery period for the ASIC levy.
“To what extent do financial advisers and financial professionals report this activity to ASIC? I would imagine they’ll see an Instagram post or they’ve received an unsolicited phone call or whatever it might be. They realise it’s unlicenced financial advice and they report it to you. How often does that happen?” Hume asked.
At the time of the Senate Estimates hearing in early June, ASIC commissioner, Alan Kirkland acknowledged adviser concerns about how ASIC’s pursuit of unlicensed advice impact the cost of the ASIC levy but said advisers were also keen to see action taken.
“…in talking to organisations like the Financial Advice Association, they’ve welcomed us taking action in relation to those practices because of the harm it does to the industry in general,” he said.
$4.88 million divided by 15,000 remaining advisers. On average this is costing advisers $325 each.
How ridiculous.
More Blah Blah Blah bureaucratic none answers.
ASIC is sooo arrogant that it deems itself above senate questions and refuses to answer.
I think Dashound owners should pay the fee.
It’s about as logical as me paying the costs to pursue large financial institutions. I have nothing to do with them either!
I would actually be quite happy to pay the ASIC levy if much more of it was focused on unlicensed advice. I would be happy to pay it if more was focused on the minority of licensed advisers causing genuine consumer harm. But only a tiny fraction of ASIC’s resources are focused on the real sources of consumer harm. The vast majority of ASIC’s financial advice regulatory resources are focused on persecuting honest, professional, licensed advisers, which in turn makes consumers worse off. The more money ASIC gets, the worse they make things for consumers.
When we report unlicensed advice, it is because we care about consumers and we consider it to be our professional duty to do so. ASIC seem to have trouble comprehending this. It has nothing to do with ‘the harm it does to the industry in general’. This is completely made up by ASIC to justify charging us a levy for it. If we were solely concerned with the health of our industry we would let it flourish: a) because when unlicensed advice inevitably results in consumer losses, it is a great advertisement for obtaining proper licenced advice; and b) lodging these complaints increases the burden of the ley on all of us, so that in a sense each complaint is an own goal.
Unlicenced advisers = members of the public = Federal Police action. Why do Financial Advisers pick up the $4.43m tab just because ASIC want to pursue them instead of turning them over to the proper authorities. We report suspicious activity to stamp out bad apples and protect the public. ASIC has stated it can only investigate between 150 – 200 cases a year. Why waste time on cases that are members of the public. Chase the licenced bad apples. It’s so frustrating and costly.
Yes ASIC should investigate unlicensed operators (that’s part of their job) but why should advisers have to pay for it! So if we call the police – do we have to pay for that to? No, that’s what taxes are for. We are the only industry paying for our own regulation whilst ASIC makes a billion dollars in revenue for the government from fines. ASIC doesn’t need our money, but we are too weak in numbers as an industry to fight back.
Correct Susie, I see Jones back down today from the accountants lobby!
“…in talking to organisations like the Financial Advice Association, they’ve welcomed us taking action in relation to those practices because of the harm it does to the industry in general,” makes the FAAA look complicit in the crippling ASIC tax.
What are they aiming for, 10,000 advisers in the country?
Agree, I cant think of one successful advocacy piece the FAA have done
Hopefully ASIC is eventually broken up as per the Senate’s recommendation… It baffles me how ASIC step in for a job the AFP should be doing.
ASIC don’t pay for anything, licensed advisers do. If ASIC paid for it they wouldn’t take months or years to do something, the amount of money lost due to ASIC’s incompetence / laziness would be significant but never really gets mentioned.