The Financial Services Council (FSC) has released a white paper on the future of advice, including recommendations the Australian Securities and Investments Commission (ASIC) levy be increased to a minimum of $25,000 and for the government to introduce a universal minimum standard of regulatory supervision.
The paper, which follows extensive industry consultation on a green paper released in July last year, concludes Australia’s financial advice licensing framework needs more proactive regulatory supervision to protect consumers.
The suggested increase in the ASIC levy to a minimum of $25,000 would be per licensee, rather than adviser, and would fund the recommended rise in supervisory activities, which also includes annual licence renewals and biannual supervisory engagement with every advice licensee.
In the white paper, the FSC argued such an approach would reduce the burden on each adviser, while also acknowledging it could cause a 15 per cent decrease in the total number of licensees due to the additional cost and therefore closure or consolidation of firms.
“The solution is not new laws, but more effective administration and supervision of the existing licensing framework so that licensees are more rigorously held to account in fulfilling their statutory duties to consumers. ASIC must be equipped with the information, resources and supervisory capability to identify and address risks before consumers suffer harm,” FSC chief executive Blake Briggs said.
The Financial Advice Association Australia (FAAA) confirmed it would review the FSC white paper and its 19 recommendations closely, but suspected it would not be well received by smaller advice licensees, which would be hit hardest by the increased regulatory intervention and ASIC costs.
“It’s important to be aware of the context of these recommendations. The FSC does not represent financial advice or financial advisers. It represents the interests of five large advice licensees, with the vast majority of its membership being made up of large product issuers (such as managed investment schemes). Its proposals should be considered in this light,” FAAA chief executive Sarah Abood indicated.
