Advisely Partner
Advisely TeamPhil, I wanted to get your thoughts on a more equitable – or perhaps proportionate – distribution of industry funding obligations for both ASIC and the CSLR. Apologies in advance for the long question.
While the actual formula for determining sub-sector levies in the 2017 legislation is quite elaborate (and dependent on a bunch of seemingly circular definitions), the adviser levy appears to basically work out to something like (ASIC's costs - ($1500 x number of AFSLS)) ÷ number of current advisers on the FAR.
Obviously, this has resulted in substantial levy increases over the years, both due to post-RC enforcement activity and declining FAR numbers. What do you think needs to change in the underlying calculations to ensure a more sustainable industry funding model? Or is it just a matter of reining in annual expenditure for both ASIC and the CSLR?
Advisely PartnerThanks Alex. Let's deal with these two matters separately. With the ASIC Funding Levy, the number of advisers is critical. An increase in advisers numbers will have an automatic impact of reducing the levy per adviser. On the other hand, what has really driven the cost has been what ASIC spends on Enforcement. In the recently released set of numbers this is $19m, versus $6.5m for supervision and surveillance. On top of this, there is a significant allocation of overheads. In total Enforcement will be costing us at least $30m out of $48m. We only get one number and no additional detail. We know that we are paying a lot of money for unlicensed operators, which we strongly disagree with. In the past we have paid for matters where the connection to financial advice was weak. The lack of transparency on this is a problem. Also, when it comes to the fines and penalties generated by the enforcement cases that we fund, we would like the money to come back into the pool to offset the Levy
In terms of the CSLR, it is very early days, however the biggest issue at present is Dixon Advisory. That is a retrospective cost that we should not be paying for. Once the Dixon Advisory debacle is behind us, it will be up to the CSLR to get the operating costs down. Otherwise we need to do everything that we can to avoid future black swan events. This means reporting concerns about licensees to ASIC and ASIC taking appropriate and timely action to minimise the risk of consumer harm.
