In a statement to the Senate Economics References Committee, the Financial Advice Association Australia (FAAA) has made recommendations to the corporate regulator to better achieve a “fair, efficient and transparent financial system”.
The association represents some 8,900 practising advisers and has around 9,525 members as of 25 August.
In the parliamentary inquiry into ASIC, Sarah Abood, FAAA’s chief executive, raised concerns regarding transparency of the ASIC levy and overcharged expenditure.
“ASIC is industry funded on a user pays model, and it apparently spent $55.5 million on oversight of financial advisers in the last financial year. This is more than it spent on any other sector including listed companies, super funds, insurers and the wholesale sector,” the CEO said.
The ASIC levy for financial advisers has nearly tripled to over $3,200 per adviser since the 2021 freeze ended in June 2023.
On 28 June, it was announced that the 2022–23 levy for advisers will be $1,500 plus $3,217 per adviser, up from $1,142 per adviser last year.
Abood previously said the FAAA was “extremely concerned” by the tripling of the levy and how it would impact advice firms.
At the inquiry, the chief executive believed that FAAA members may be paying for expenditure that should not be attributed to them.
“We have no visibility of how ASIC attributes its enforcement costs, and very little information is provided to the regulated population on how its money is being spent.
“More transparency would allow for any errors to be picked up ensuring costs are being shared fairly, improving confidence in the system,” she recommended.
Abood made two additional suggestions relating to clearer reporting of misconduct and breaches.
“ASIC could better leverage and more transparently report intelligence from the financial adviser population,” the chief executive said.
When FAAA members pass on information regarding misconduct to ASIC, most cases are left with no further information and members are unclear if any action has been taken.
Abood continued: “This is disheartening for those who have taken time and trouble, and sometimes risk, to report misbehaviour and it lessens the chance that future reports will be made.”
ASIC was also urged to prioritise issues that pose the highest risk to consumer harm.
Following the overhaul of the breach reporting regime in October 2021, it is now required for licensees to report “much less serious matters” to ASIC than previously, the CEO observed.
“Breach reports have now tripled, and we are concerned that this has resulted in ASIC being overloaded with reports of minor administrative and technical breaches.”
