‘Involve smaller advisers in your decisions’, government told

On Monday morning, Treasurer Josh Frydenberg delivered news that advisers have been anticipating for some time – announcing that the cost of levies charged by ASIC will be temporarily reduced.

As such, levies charged for personal advice to retail clients are set to be restored to their 2018-19 levels of $1,142 per adviser for the next two years, while levies charged per licensee remain at $1,500 as opposed to the $3,138 ASIC was readying to seek.

Adviser Timothy Munro applauded the changes, noting that “we’re starting to see some common sense with the way financial advisers are treated”.

“This announcement will reduce the ASIC levy by approximately $2,000 per advisor which is brilliant. Any extra costs put onto advisers need to be charged to clients at the end of the day, so it’s a win for clients as well as for advisers,” the chief executive of Change Accountants and Advisers said.

While Treasurer Frydenberg did announce a complete review of the ASIC Industry Funding Model will commence in 2022, Mr Munro said he would like to see the government re-examine the “entire way” financial advice is provided to clients.

“Mums and dads of Australia are fed up with being given massive documents like Statements of Advice that they can’t understand and rarely read when they may have requested relatively simple financial advice,” Mr Munro explained.

He also stressed the need to involve smaller advisers in any future government discussion on improving the financial advice process.

“In the past it’s been driven by the large financial advice companies, big banks and their lawyers and they’ve obviously pushed for things that were in their interest, not in the interest of smaller advisers and in hindsight obviously not in the interest of the average Australian needing financial advice,” he said.

Similarly on Monday, the Institute of Public Accountants’ policy leader Vicki Stylianou welcomed the relief to advisers, noting that it’s “exactly what practitioners have been begging for the last three years, at least”.

“It is encouraging to see the government and ASIC undertaking practical measures to reduce cost pressures on financial planners and tackling the compounding effect of new regulation and overall inefficiencies in the system,” Ms Stylianou said.

“The quality review which was already scheduled for next year, and may include a holistic review of ASIC’s funding model, is incredibly important in assessing impact on industry. But it must be a genuine cost benefit analysis.”

The IPA teamed up with its peers - CPA Australia, Chartered Accountants Australia and New Zealand  - in a join statement on Monday afternoon to urge the government to extend this relief to all financial services participants, not just financial advisers.

"This will provide widespread regulatory certainty while the profession awaits the review of the ASIC Industry Funding Model," the bodies said. 

ASIC fees for financial advisers have increased by more than 230 per cent over the past three years and contributed to the decrease of financial advisers to just over 19,000, a loss of more than 2,000 since November 2020.