The Financial Planning Association of Australia (FPA) has called on the federal government to make it more affordable for financial advisers to practice, highlighting the Australian Securities and Investments Commission’s (ASIC) industry levy as a key concern.
As part of its budget submission for 2021/22, FPA chief executive Dante De Gori said: “This has been the focus of the FPA’s policy work over the past year and formed the foundation of our new policy platform – Affordable Advice, Sustainable Profession – which was released in June 2020.
“The voice of the FPA, its members and the profession is now being heard. With ASIC recently announcing a formal consultation on promoting access to affordable advice, the FPA has used its budget submission 2021/22 to tackle the key issues that should be addressed immediately by the federal government.”
In particular, the association recommended the ASIC industry levy be reviewed, urging the government to consider a more predictable annual levy and restrict year-on-year increases.
“The levy amount each year has proved to be unpredictable, which makes it practically impossible for a financial planner to effectively budget for this business cost,” De Gori said.
“Secondly, the levy has been increasing at a dramatic rate that far outstrips the rate of revenue growth for most financial planning businesses and is being exacerbated by a reduction in the number of financial planners from whom the levy must be recovered.
“The levy per financial planner has increased from $934 in 2017/18 to approximately $2000 in 2019/20. In three years of operation, the levy for financial planners will likely have more than doubled and there is no indication that increases of this scale will cease for 2020/21 or future years.”
He noted that for the 2019 financial year, ASIC stated, in March 2019, that the cost per planner for the levy would be $907, but when invoices were issued last month, the cost had risen by 26 per cent to $1142.
A similar increase was expected for the 2020 financial year as the regulator predicted in March 2020 that the levy for 2019/20 would be $1571, but the FPA expected the amount will exceed $2000.
De Gori also noted a review of the levy should consider its overall impact on the industry, pointing out it was likely to be having a negative effect on competition and the long-term success of financial planning businesses.
“As it has been three years since the levy was first introduced, it would be an appropriate time to review its implementation and impact on the financial services sector,” he said.
Yesterday, the SMSF Association called on the government to use the 2021/22 budget to reduce the complexity in the superannuation and retirement income system.
