What does the advice sector want from this year’s budget?
The Financial Advice Association Australia (FAAA) has released its pre-budget submission to help reduce the cost of professional advice.
In the lead up to the 2024–25 budget tonight, the industry body has put forward six focus areas that will have a positive impact on the financial future of Australian consumers.
These are:
- Implement a fairer ASIC funding levy.
- Ensure fairness and manage costs of the Compensation Scheme of Last Resort (CSLR).
- Enhance tax deductibility of financial advice.
- Enable financial adviser access to the ATO portal.
- Provide more support for financial adviser education and exam price relief.
- Reverse proposed changes to reduced input tax credits for advice fees.
According to the FAAA, the cost of advice is continually cited as the top reason why Australians do not seek professional advice. Its proposed measures will assist in making advice more accessible and affordable to everyday consumers.
Sarah Abood, chief executive of the FAAA, said the industry association remains “very concerned” about the fast-increasing cost of the ASIC levy.
“The financial advice subsector was charged in total $47.6 million last financial year – more than any other sector including super funds, listed companies, and life insurers. The per-adviser amount almost tripled to $2,818 per adviser in the last year. These rapidly increasing costs are a factor in the increasing cost of financial advice to consumers,” she explained.
Abood also expressed the industry’s concerns over compliant advisers who are forced to pay for enforcement action against fraudsters and unlicensed operators.
Moreover, the FAAA reiterated the retrospective impact of the CSLR which needs to be resolved. Last week, the group called on Minister for Financial Services Stephen Jones to address the spiralling Dixon Advisory complaints.
With the expected cost of the scheme potentially rising to over $100 million, Abood urged the government to ensure current compliant advisers are not paying for historical failures.
“We are urgently calling on the government to remove retrospectivity by covering historical claims based on the date the claim is made, not the date the claim is finalised. We are also calling on the Australian Financial Complaints Authority (AFCA) to make clear the timing and circumstances under which Dixon’s membership of AFCA will cease.”
Its third item, to make advice fully tax deductible, has been a long objective of the FAAA’s advocacy.
“Such a concession could be effectively targeted to those with the most need, and budget costs managed, in a number of ways – such as by introducing the deduction with a capped amount (such as $3,000) that could be claimed in a single year.”
Overall, the FAAA chief executive said it is “imperative” to reduce red tape and the cost of regulation to ensure a more affordable advice sector.
AUTHOR
Jasmine Siljic
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