Bodies behind exorbitant advice costs need to be held accountable
If the Government truly wants to make financial advice more affordable to Australians, it needs to hold the parties that are exponentially increasing the cost of advice accountable.
While its Better Advice Bill aims to streamline the number of bodies overseeing the financial advice industry, advisers have been crying out for just one.
Even without increasing levies and fees to various bodies and licensees, the cost to practice is already close to $100,000 for businesses with just a few staff members.
This brings us to looking at the Australian Securities and Investments Commission (ASIC) adviser levy that has increased 340% over the last four years.
The price of any product or fee increasing 340% in four years would rightly incite outrage from those impacted by the rise.
While a Senate committee has called this kind of exponential increase “unsustainable”, it needs to hold the regulator accountable.
While ASIC has said the fee increase had to do with advisers leaving the industry, the fact that it now needs to regulate fewer advisers does not make sense.
The expected increase from the year before is an extra $712 but the estimate is based on 21,308 advisers and latest figures show that the number of advisers is 19,079. The industry is expecting the levy to be much higher than the estimated $3,138 for every adviser.
Not only this, much of the levy is expected to be used on enforcement costs that advisers feel they should not be paying. Those costs were tied to Royal Commission actions that were mainly to do with large institutions that had since left the industry.
Despite paying such a high fee, one of the areas ASIC looked to fund using the levy was the Life Insurance Framework review but while the findings would be sent to Treasury, it would not release a public report.
Transparency is important and if ASIC is continuously charging such high levies, it is unreasonable that they would not release the findings.
The Government needs the regulator to answer questions on what exactly the levy is funding and hold them accountable if they do not find their explanations reasonable.
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