ASIC levy prompts doubling of ongoing fees for Qld adviser
A financial adviser has detailed how the latest ASIC levy increase has caused him to double the ongoing advice fee for his clients to meet the cost.
Speaking at a public hearing of the Senate Economics References Committee inquiry into ASIC, two financial advisers discussed their experiences with the ASIC levy and industry funding model with committee chair, Senator Andrew Bragg, and deputy chair, Senator Jess Walsh.
The latest indicative ASIC levy for 2022–23 was a minimum levy of $1,500 for licensees that provide personal advice to retail clients on relevant financial products plus $3,217 per adviser. This was up from $1,142 per adviser in the previous year.
The levy metric is based on the number of relevant providers (within the meaning of s910A of the Corporations Act) on the Financial Advisers Register (FAR).
Ross Smith of Shenton Limited said he has 10 advisers at his practice, which means his latest ASIC levy is $35,000 a year – triple his annual profit.
“We don’t have the cash to pay that, and it is impossible to budget for because we don’t know how much it will be. ASIC works it out based on the last financial year, but we don’t get the invoice until January next year so we can’t budget for it.
“What this means is we have to go back to our clients again and get them all to sign new forms to double their ongoing adviser services fee just to pay for the levy. All my clients are old pensioners with the age pension and a small superannuation.”
When asked what he received from ASIC from paying the fees, Smith said: “Nothing. We get nothing for the fee. They don’t care; they are not interested in financial advisers.”
Peter Alvarez, adviser at Navigate Wealth in Sydney, said his levy is $6.5k, up from $1,900 in the previous year.
“We don’t have much interaction with ASIC; they take a long time to respond to anything. Anything that does go through, it goes into a black hole and we don’t get much feedback.”
Alvarez also discussed the lack of transparency around how the levy is spent and the amount spent on enforcement work.
“We don’t get any data. We are not told as advisers where our ASIC levies are spent and how much of the prosecutions are recovered successfully. We don’t have that transparency.
“Enforcement costs should be cut off of the levy and be paid by the government. I’m happy to pay something towards the operation of ASIC but not for enforcement.
“If the court gives bad apples jail time and dissuades other bad apples, then we won’t have any more bad apples. But the sentencing is too lenient, so it continues to happen. We need solid jail time for each and every offender.”
The ASIC inquiry also revealed ASIC made 41 prosecution referrals to the Commonwealth Director of Public Prosecutions (CDPP) in the 2022-23 financial year.
This compared to 86 referrals made during the 2018-19 financial year, a decrease of 52 per cent.
In the current financial year, there had been two referrals made by ASIC so far.
AUTHOR
Laura Dew
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If Ross is running a profit per adviser of $1,000, perhaps he should seek alternative employment as that is terrible. I don't know how you could possibly feel in any position to give financial advice to anyone.
Where do they find these people?
"Ross Smith of Shenton Limited said he has 10 advisers at his practice, which means his latest ASIC levy is $35,000 a year – triple his annual profit."
This business makes $1,166 p.a, per adviser.
How can you call yourself a financial adviser when your margin is that thin?