Moves by the federal government to cap the adviser levy applied by the Australian Securities and Investments Commission (ASIC) will save the advice sector more than $45 million a year and cut ASIC’s recovered costs by 60 per cent, according to figures released by the regulator.
Following the release of its draft 2020-21 Cost Recovery Implementation Statement (CRIS) in July, ASIC released the finalised CRIS today, in which it stated the estimated cost of regulating the advice sector for 2020/21 was $71.4 million.
This figure was based on a levy of $3138 per adviser and $1500 per licensee, and 21,308 advisers and 2999 licensees, at the end of the 2021 financial year, and was reported in the draft CRIS.
The individual adviser levy came under widespread criticism from the financial advice sector, which questioned the 31 per cent increase over the previous year’s levy and the 340 per cent rise over the previous four years.
In response to this, Superannuation, Financial Services and the Digital Economy Minister Jane Hume announced the levies would be capped for the 2021 and 2022 financial years and lowered to the 2018/19 level of $1142 per adviser.
As a result of these changes, ASIC stated in the finalised CRIS: “Following the decision to cap levies, and assuming an estimated 18,750 advisers and 2934 licensees in 2020-21, the estimated costs that will be recovered from this subsector for 2020-21 is $25.8 million.”
This amount represents a $45.55 million, or 63 per cent, decrease in expected levies for ASIC for 2020/21 based on the adviser numbers and levies in the draft CRIS compared to those reported in the finalised CRIS.
In the CRIS, ASIC stated it would spend $8.5 million on supervision and surveillance and $31.4 million on enforcement activities in the advice sector.
Other regulatory activities, such as industry engagement, education and guidance, would cost $3.35 million and indirect costs related to governance and legal work, IT and operation support, and property and corporate services would total $24.7 million.
Final levies will be published in December 2021 and invoiced in January 2022, and waivers due to the impact of the COVID-19 pandemic on advice businesses will be considered on a case-by-case basis.
