The Financial Planning Association of Australia (FPA) has slammed the Australian Securities and Investments Commission's (ASIC) latest estimated industry funding levy for financial planners in Australia.
ASIC has released its “Cost Recovery Implementation Statement 2020-21,” featuring its estimated industry funding levies for the financial advice sector. It estimated that licensees will have an ASIC levy of at least $1,500 plus $3,138 per financial adviser for FY2020-21 – a $712 increase from the previous financial year.
The FPA is urging ASIC to review the current formula for the levy before more financial planning practices are forced to close – emphasising that the formula is not equitable or sustainable, and the industry levy for financial planners has gone up over 340% in the last four years and is on an unsustainable trajectory.
“In light of extended lockdowns across the nation, the FPA questions the validity and timing of the increase, with millions of Australians unable to work and some businesses struggling to keep staff employed,” said Dante De Gori CFP, the chief executive officer of FPA.
“The FPA strongly recommends that the ASIC industry levy be reviewed immediately to provide a more equitable and predictable annual levy and for the year-on-year increases to better reflect the capacity of the financial planning profession.”
While the FPA acknowledges the need for an industry-funded regulatory model, it noted two major issues since the levy was first applied in the 2017-2018 fiscal year:
- The levy amount each year has proven to be unpredictable, making it practically impossible for a financial planner to effectively budget for this business cost, particularly by profession dominated by small and medium-sized businesses.
- The levy has been increasing at a dramatic rate that far surpasses the rate of revenue growth for most financial planning businesses or increases to ASIC's budget, being compounded as the number of registered financial planners in Australia have continued to decline from whom the levy must be recovered.
“It has been four years since the levy was first introduced, and it is now critical to review its implementation and impact on the financial services sector. Making financial advice more affordable for all Australians starts with making financial planning more affordable to practice,” De Gori said.