Implementing a fairer ASIC Funding Levy is amongst six ideas the FAAA believes will have a positive impact on the financial futures of Australians by reducing the cost of professional financial advice.
The association’s 2024-25 Pre-Budget Submission to Treasury provides a detailed background on why each of the six ideas are included in the submission and some practical steps in each case that could be taken immediately.
Addressing its call for a fairer ASIC funding levy, the association notes the financial advice subsector was charged in total $47.6m last financial year – more than any other sector including super funds, listed companies, and life insurers. The per-adviser amount almost tripled, to $2,818 per adviser in the last year.
It says these rapidly increasing costs are a factor in the increasing cost of financial advice to consumers.
The FAAA’s suggestions are:
- Government should review and implement the changes to the ASIC Industry Funding Model recommended by Treasury in its recent review, before the levy for next financial year is finalised.
- Government should “…not be profiting from risk-free enforcement actions undertaken by ASIC. At minimum, the Industry Funding Model should be further amended to ensure proceeds of successful enforcement are used to offset costs, before compliant small advice businesses are charged.”
- The costs of action against fraudsters and unlicensed operators “..ought to be borne across the entirety of the financial sector rather than the single financial advice sub-sector, as the whole sector benefits from consumers having confidence that fraudsters will be actively pursued.”
…ASIC ought to disclose more detail regarding how their funding is spent. Financial advisers have a right to know what activities they are paying for…
- As a matter “…of basic fairness, ASIC ought to disclose more detail regarding how their funding is spent. Financial advisers have a right to know what activities they are paying for, and this will also lead to greater confidence in the system by ensuring that any errors or misallocations can be resolved.”
- The Government has accepted in principle a recommendation to enable financial product issuers … to provide financial advice on their products outside the current regulations, using staff who will not be professional financial advisers. “This has the potential to further confuse the allocation of ASIC enforcement costs in the financial advice space, and no information has yet been provided on how this will be done. We suggest that as these individuals will be employees, ASIC costs must be clearly allocated to the sector of the employing entity.”
The other ideas the FAAA raises are:
- Ensure fairness and manage costs of the Compensation Scheme of Last Resort
- Enhance tax deductibility of financial advice
- Enable financial adviser access to the ATO portal
- Provide more support for financial adviser education and exam price relief
- Reverse proposed changes to Reduced Input Tax Credits for advice fees
Click here for the full submission.
