ASIC confirms levy to jump following freeze expiration

In its draft CRIS, the corporate regulator said the cost of regulating licensees that provide personal advice to retail clients was $55.5 million in 2022–23, down from $56.7 million budgeted last year.

The cost will be divided among a total of 2,655 AFS licensees, encompassing 16,019 advisers.

As such, advisers will pay a minimum levy of $1,500 plus $3,217 per adviser.

However, under the former government’s ASIC levy freeze, the costs actually charged to the sector amounted to $22.8 million. This meant that at the time, advisers were charged a minimum levy of $1,500, plus $1,142 per adviser.

Earlier this week, the government announced it will end the ASIC levy freeze implemented by the previous government during the pandemic.

The freeze was introduced in August 2021 by the-then treasurer Josh Frydenberg as “temporary and targeted relief” for financial advisers. Among other things, it saw ASIC levies charged for personal advice to retail clients restored to their 2018–19 level of $1,142 per adviser.

Despite calls for its immediate extension, in announcing the release of the final report on the review of the ASIC Industry Funding Model (IFM) on Monday, Financial Services Minister Stephen Jones said the freeze will not be extended.

According to the review, the levy relief cut the total regulatory costs for the sub-sector from $60 million in 2020–21 to $25.8 million, and from $56.7 million in 2021–22 to $22.8 million.

Levy breakdown

Costs for regulating licensees providing personal advice on products that are not relevant financial products are expected to be slashed from $73,059 to $65,295.

For licensees that provide general advice only, ASIC predicts that the regulation cost will rise to $2.8 million, from $1.3 million a year earlier.

For those that provide personal advice to wholesale clients only, costs are projected to reduce to $33,610 from $50,938.

On the insurance front, costs are expected to hit $28.04 million for product providers, with a minimum levy charged at $20,000 plus $5.23 per $10,000 of revenue above the $5 million threshold. In 2021–22, the cost of regulating the insurance product providers was $24.3 million.