ASIC estimates cost of regulating advice sector will drop in 2021-22

Costs to regulate subsectors across the advice sector are expected to decrease from 2020-21 to 2021-22, according to ASIC.

In its draft CRIS, the corporate regulator predicts that the cost of regulating licenses that provide personal advice to retail clients on relevant financial products will drop from $25.8 million to $24 million.

The estimated cost covers 2,759 AFS licensees and 17,402 financial advisers, while a minimum levy of $1,500 is expected, plus $1,142 per adviser.

Regulating licensees providing advice on products that are not relevant financial products are also expected to be slashed from $189,817 to $65,575.

For licensees that provide general advice only, ASIC predicts that the regulation cost will be $505,467, down from $602,613 in 2020-21.

However on the insurance front, costs are expected to increase for product providers.

ASIC estimates that the cost will jump from $24.6 million to $29.4 million.

Just over $4 million of that figure will go towards enforcement while over $3 million is expected to go towards supervision and surveillance.

The regulation of risk management product providers is set for a significant spike, with costs predicted to go from $118,762 in 2020-21 to $597,843.

Regulating insurance product distributors is expected to remain at $3 million.

Meanwhile the 2021-22 year will be the first time claims handling and settling services providers is treated as a separate subsector in which they will be charged a levy. The estimated cost of regulating the subsector is $804,069.

Final levies will be published by ASIC in December 2022 and invoiced between January and March 2023.

Feedback on the draft CRIS can be submitted until 28 June 2022.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.