The FAAA is calling on Minister Stephen Jones to take action on the “drastically escalating” costs of the CSLR, pointing to further complaints about Dixon Advisory that are estimated to equate to additional direct costs to every financial adviser of over $4,000.
The association says that a recent update from AFCA noted a further 544 complaints about Dixon Advisory have been made since 15 February 2024 “…generating an estimated additional cost of approximately $65 million, that the financial advice profession will have to pay.” (See: Urgent Call for Govt to Resolve CSLR Costs).
…this equates to a direct cost to every financial adviser of $4,165 on top of what has already been disclosed by the CSLR…
The FAAA says this equates “…to a direct cost to every financial adviser of $4,165 on top of what has already been disclosed by the CSLR. This is a huge impost for the financial advice profession that is already dealing with declining numbers and spiralling costs.”
FAAA CEO Sarah Abood says the Dixon Advisory AFCA membership has already been extended twice “…and the entity was put into administration over two years ago now. We urgently call upon the AFCA board to clarify the process and timing for that membership to end.”
She says the association also “…urgently, again, calls upon the government to review the funding model of the CSLR. Not only is it completely unfair, but it is also economically impossible for the small business financial advice sector to underwrite the failures of large listed firms.”
…It is not too much to say that this matter represents an existential threat to our profession…
Abood says advisors should not and cannot pay for the failure of Dixon Advisory. “It is not too much to say that this matter represents an existential threat to our profession.”
She says the Minister “…has not yet responded to our many requests for engagement on this matter, and we call upon him again to work with us urgently to find a sustainable solution to this crisis.”
Federal Budget: Six Key Items to Reduce Cost of Advice
Ahead of the 2024 Federal Budget, the FAAA has put forward six key items it says will have a positive impact on the financial futures of Australian consumers hit by the rising cost of living.
As well as calling on the Federal Government to better manage costs across the CSLR, the association wants to see Government implement a fairer ASIC funding levy for advisers.
In its pre-budget submission, it says cost is continually cited as the number one reason why Australians don’t seek professional advice, and that these measures will help by reducing the cost of advice – making it more accessible and affordable.
The areas of focus are:
- Implement a fairer ASIC Funding Levy
- Ensure fairness and manage costs of the CSLR
- 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
Abood notes the FAAA remains “…very concerned about the fast-increasing cost of the ASIC levy, noting the financial advice subsector was charged in total $47.6 million 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. ”
