The Financial Planning Association of Australia The Financial Planning Association of Australia

FPA calls for ASIC to stop financial planner fee gouging

The Financial Planning Association of Australia (FPA) has urged the corporate regulator to reconsider a 38% increase to the ASIC industry funding levy for financial planners as the nation enters its first recession in 29 years.

On Friday, 12 June, ASIC released for consultation its Cost Recovery Implementation Statement 2019-20 (CRIS), which has been prepared based on its planned regulatory work and budgeted allocation of costs at the beginning of the 2019–20 year.

ASIC estimates that the industry funding levy for 2019-20 will be $1571 per adviser, a 38% increase on the previous year. The corporate watchdog is looking to recoup $40.17 million from 3,051 AFS licensees with 22,652 advisers.

While ASIC states that the indicative levies for 2019–20 are an estimate, the FPA believes a 38% cost increase per adviser is excessive and last financial year the final levy amount was even higher than the estimate.

Dante De Gori CFP®, CEO of the FPA described the increased levy as “fee gouging” and an unreasonable demand of financial planners given the current economic environment.

“Financial planners were hit with a 22% increase in 2017-18. Now ASIC estimates the levy will increase by 38% for 2019-20. No matter which way you look at this, it is excessive at a time when financial planning professionals are working hard to help their clients through extraordinary circumstances,” he said.

“Financial planners themselves are already under tremendous pressure to meet new education requirements, await critical outcomes on the FASEA extension from an unpredictable parliament and overhaul their business models to meet regulatory requirements.

“As small businesses, financial planning practices also face the challenges that COVID-19 has created for the wider SME sector. ASIC’s fee hike does nothing to support them or their clients during this difficult time.”

ASIC also announced that measures designed to make financial advice more accessible to Australians during the COVID-19 pandemic will be removed.

ASIC has set an end date of 15 October for the COVID-19 relief measures including:

  • Relief to facilitate advice to individuals financially affected by COVID-19 about early access to superannuation
  • Relief extending the period for giving time-critical Statements of Advice
  • Relief to allow a Record of Advice to be given instead of a Statement of Advice in certain circumstances

Mr De Gori said the industry was not consulted on the decision.

“These relief measures have made advice more affordable for Australians when they need it most by reducing costs among financial planning practices,” he said.

“ASIC had asked us to canvas members on their use of these relief measures and we are still in the process of compiling this feedback.

“It is too early to understand how long these measures will be needed and far too soon to be setting an end date, given that the feedback process is yet to be completed.”