“Some things in life are bad, they can really make you mad.
Other things just make you swear and curse.
When you’re chewing on life’s gristle, don’t grumble, give a whistle and this’ll help things turn out for the best and….
Always look on the bright side of life”
— Monty Python
The Levy
Each year ASIC publishes their Cost Recovery Implementation Statement (CRIS), providing us with information on the costs of their regulatory activities for each industry sub-sector.
The CRIS contains estimated costs and levies, they’re indicative, ASIC makes it very clear the invoice Licensees receive between January and March are your actual levies.
Your ASIC industry metrics submission in September assists in the calculation of actual levy costs.
This is the timeline the Regulator works towards:
The anticipation
So when the Australian Securities and Investments Commission (ASIC) released their 2022-23 CRIS in June there was a collective gasp heard across our industry.
Whilst Licensees were grateful for the freezing of fees from ASIC over the past 2 years, they were hoping the Regulator might extend some further relief in the 2022-2023 financial year, however the estimated levy seemed to indicate otherwise.
The actual levy amount for Financial Year 2021-22 (last year) was:
Calculating the 2022 cost: Small Licensee
Using the above 2021-22 figures lets take a look at what a Licensee with 4 Relevant Providers, providing personal retail investment and insurance advice paid:
Minimum levy: $1,500
Per Adviser: $1,142 x 4
Insurance product distributors: $907
Total levy: $6,975
CRIS estimated figures provided in June 2023
Calculating the 2023 cost: Small Licensee
Using that same Licensee, lets look at their estimated levy for Financial Year 2022-23 based on the above figures:
Minimum levy: $1,500
Per Adviser: $3,217 x 4
Insurance product distributors: $786
Total levy: $15,154
Based on these figures, the Licensee will be paying an estimated increase of $8,179 for the Financial Year 2022-23.
Keep in mind the above is indicative pricing, as shown via the Regulatory cost timeline, the legislative instrument is required to reflect the true calculations and costings for the financial year, which have now been released in two parts (below if you’re keen to read).
- https://www.legislation.gov.au/Details/F2023L01473;
- https://www.legislation.gov.au/Details/F2023L01474
FAAA to the rescue
The Financial Advice Association of Australia (FAAA) challenged the numbers and methodology used for the estimated costings released in June of this year.
With the final figures now released, the cost to the financial services sector has reduced by nearly $8,000,000.
Based on these finalised figures released, the FAAA believes the final fee per adviser will be reduced by $400, bringing the figure down to $2,818 per adviser.
What does this mean for our small Licensee?
This means a saving of $1,600, the total levy for the 2022-23 Financial Year being $13,554 instead of $15,154.
Whilst the $400 reduction per adviser may seem modest at first glance, when aggregated across the entire financial advisory sector, it represents a substantial relief in the overall financial burden. Licensees have long expressed concerns about the rising costs of compliance; unrelenting increases erode profit margins and make it more challenging for smaller firms to compete.
This reduction in the ASIC funding levy, whilst modest, should have a positive impact on Licensees bottom line.
The decision to reduce the ASIC funding levy for financial advisers reflects a broader effort to balance the need for effective regulation with the economic sustainability of the financial advisory sector. ASIC and the Government recognise that the financial services industry plays a crucial role in the Australian economy, providing individuals and businesses with essential services to manage and grow their wealth.
We hope the decrease in levies will lessen the financial burden on Licensees, and allow them to invest in innovative technologies, enhance clients’ experience and build a more competitive and more sustainable advice profession.
