In its latest Cost Recovery Implementation Statement (CRIS) for its Industry Funding Model (IFM) for 2018–19, ASIC said it was not able to make amendments to the model despite submissions from stakeholders who questioned its design.
One such submission was from Chartered Accountants Australia and New Zealand, which called for the levy for AFS licensees that provide personal advice to be waived or reduced for accountants with limited authorisations.
In its response, the corporate regulator said the government had “undertaken extensive consultation to develop and refine the industry funding model” and that any “amendments to the model are a matter for government policy and will require legislative change”.
As it stands, Australian financial services licensees that provide personal advice to retail clients on relevant financial products will have to pay a minimum levy of $1,500 plus $907 per adviser.
However, ASIC said a review of the funding model could be on the cards in the near future.
“From time to time, ASIC and the Australian government will review the operation of the industry funding model and make amendments to the model,” ASIC said.
“The submissions we have received on the CRIS will help inform this process.”
The corporate regulator was also forced to explain how the government’s promise of an additional $550 million in funding would affect the levies under the IFM.
“The additional funding for ASIC announced in March 2019 will be provided over a four-year period commencing in 2019–20,” ASIC said.
“The budgeted costs in this CRIS relate to our 2018–19 budget, which is not affected by the additional funding.
“Future versions of the CRIS will reflect the increased funding once appropriated and the amount that will be recovered in each subsector in the relevant period.”
‘Likely to leave the industry’
ASIC’s latest position will bring little joy to the industry, with CA ANZ warning in its submission that accountants were likely to leave the advice space due to a number of rising costs, including the need to comply with the Financial Adviser Standards & Ethics Authority’s education reforms.
“Many of our members have told us that they have serious concerns about the new standards, and will likely leave the financial advice industry if they are required to do further study,” CA ANZ said.
“They are further disincentivised to remain in the financial advice space by the industry funding levies.
“Furthermore, chartered accountants who elect to remain will have little choice but to pass on their increased costs to their clients, which is again at odds with the government’s objective of making quality financial advice accessible for all Australians.”
CPA Australia have also lobbied hard against the IFM, arguing that the high costs would lead to further market concentration, in turn pushing up prices, and discouraging new entrants into the sector.
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.