In its submission to Treasury’s CSLR levy consultation, The Advisers Association (TAA) has included a recommendation that consumers contribute to the scheme.
The association’s CEO Neil Macdonald says while TAA agrees in principle with the scheme, its 900 members continue to be concerned about the unexpected and unintended outcomes of the CSLR “…which must be addressed”.
He says the scheme must genuinely become a scheme of last resort and that regulators must take “quick and effective action against entities and other parties to minimise losses, increase recoveries, and banish wrong doers from the industry”.
…Wholesale clients should be excluded from a scheme that is meant to protect retail clients…
“Wholesale clients should be excluded from a scheme that is meant to protect retail clients, and any claims should be based on a capital loss, not the ‘but for’ calculation, which creates a moral hazard,” said Macdonald.
He also said managed investment schemes should be included in the scheme, “as product failures contribute to and are often the root cause of many of the claims”.
The CSLR has an annual industry cap of $250m and sub-sector caps including $20m for advice licensees.
“These are big numbers, funded by the various participants in the scheme, including our members,” said Macdonald.
“The operating environment has changed significantly since the CSLR’s inception a few years ago, with the exit of the big four banks, changes to institutional ownership and advice licensees, and a dramatic fall in adviser numbers from over 28,500 when the scheme commenced to approximately 15,000 today.”
…costs already being imposed on the advice profession are impacting its sustainability…
While the association recommends funding for the excess of the sub-sector caps should be spread as far as possible across AFCA members, its submission to Treasury suggests applying a levy directly to consumers “as they have been applied in many other sectors, such as the ambulance levy, the fire services levy, bush fire levy, flood levy, etc”.
“It should be clear by now that [in] the current regulatory environment, the CSLR levy and other rising costs already being imposed on the advice profession are impacting its sustainability and viability to attract and retain advisers,” states Macdonald.
“It has also resulted in them having to raise the cost of their advice, and fewer Australians being able to access affordable professional advice.”
Click here to read the TAA’s submission in full.
