Banks and institutions moving out of the provision of advice should be charged exit fees to lessen the financial burden of the Australian Securities and Investments Commission (ASIC) levy placed on advisers choosing to remain in the industry, The Advisers Association has said.
Following the recent revelation by the ASIC of a proposed jump in levies for financial advisers, the association has called for an exit fee on major banks and institutions choosing to drop their advice networks, and recommended a fee “of around $7400 per adviser, calculated as a three-year multiple of the current levy, and based on their adviser numbers as at the date of the Hayne royal commission report”.
“As it stands, the ASIC levy is only being allocated to those advisers and licensees who choose to remain in the industry,” Advisers Association chief executive Neil Macdonald said.
“By exiting advice, the major banks, despite being largely responsible for some of the poorest behaviours, are able to avoid paying their fair share. It’s simply not good enough.”
The association also called on the federal government to provide relief to those advisers opting to stay in the industry and who now faced a hike in levy costs.
“[Imposing an exit fee] would enable the remaining advisers to pay a more reasonable amount in what is still a difficult COVID-19 environment,” Macdonald noted.
“The advisers remaining in the industry are those who are committed to the profession, who are committed to their clients and who are building strong practices that can withstand the changing times.
“Expecting these advisers and their clients to just keep paying ever-increasing costs for the sins of the past, largely committed by the big end of town, is unconscionable.”
In addition, he pointed out Treasury was responsible for the costing model that had led to the higher levy and demanded a review of the model and its impact on advisers and their clients.
“The normal process before implementing this kind of burden would include a stakeholder impact analysis. That may not have happened in this case and there are now some unintended consequences,” he added.
“What we have now is an abnormal market where the worst users don’t have to pay because they exited. They should not be allowed to just walk away from the levy scot-free.”
Earlier this month, the SMSF Association, Chartered Accountants Australia and New Zealand, CPA Australia, Financial Planning Association of Australia and Institute of Public Accountants strongly opposed ASIC’s decision to increase the levy charged to financial advice licensees and advisers.
