Advisers' Levy Driven by New Compliance Costs

3

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The bulk of the additional levy is directed towards the funding of the Compensation Scheme of Last Resort (CSLR), a mechanism aimed to ensure consumers receive compensation owed by financial firms that have failed. Additionally, costs related to the adviser exam and the creation of a single disciplinary body for advisors add to the financial burden.

Further driving up costs is ASIC’s oversight activities regarding choice superannuation products. This has raised eyebrows within the financial advisory community as to why advisers should bear this specific administrative cost, which arguably involves superannuation funds as a key component of the equation.

ASIC has broken down these costs, itemizing the components being billed to advisors. This includes:

• CSLR implementation
• Choice superannuation products oversight
• Adviser examination and registration
• Compliance for SMSF (Self-Managed Super Funds) establishment advice
• The newly structured single disciplinary body system

Moreover, financial advisers will share additional regulatory costs with other financial advice sub-sectors. These costs encompass several areas including ASIC’s cyber resilience initiatives, breach reporting mechanisms, the employment of artificial intelligence, dispute resolution processes, penalties for the non-lodgement of financial reports, enforcement against unlicensed financial advice, and restrictions on cold-calling for superannuation switching.

Critics argue that the levy structure places an undue financial load on advisers for areas where other stakeholders, such as superannuation funds and accountants, significantly contribute and should possibly share responsibility. For example, the costs associated with SMSF establishment advice compliance are shared more equitably between accountants and advisers, reflecting their respective roles.

On a positive note, costs associated with combating unlicensed financial advice and cold-calling superannuation switching will be distributed across all financial advisory sub-sectors rather than being shouldered solely by individual advisers.

Financial advisers looking to understand the reasoning behind their increased ASIC levy can refer to the detailed breakdown provided by ASIC. According to ASIC's figures, the overall regulation cost for the financial advice sector for 2022-23 sat at $47.6 million, which is poised to rise to $48.4 million in 2023-24.

The need for these measures, while increasing costs in the short term, is part of an effort to create a more robust and fairer financial advisory industry, aiming to benefit consumers and professionals alike by ensuring higher standards and better protection mechanisms.

Source: ASIC Bulletin

Published:Wednesday, 10th Jul 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

AFCA Criticises TAL for Unfair Termination of Income Protection Benefits

16 Nov 2025: Paige Estritori

The Australian Financial Complaints Authority (AFCA) has recently ruled against TAL, a prominent life insurer, for terminating a policyholder's income protection benefits without prior notice. This decision underscores the critical importance of procedural fairness in the management of insurance claims. - read more

Actuaries Institute Highlights Financial Strain of Mental Illness on Insurance Systems

16 Nov 2025: Paige Estritori

The Actuaries Institute has issued a call for immediate action to address the escalating financial strain that mental illness is placing on Australia's insurance and compensation systems. This appeal underscores the pressing need to ensure the sustainability of the nation's financial safety net in the face of increasing mental health-related claims. - read more

Fitch Ratings Anticipates Continued Premium Increases in Australian Insurance Sector

16 Nov 2025: Paige Estritori

Fitch Ratings has projected that Australian insurers will continue to implement premium increases, with gross written premiums expected to grow by mid to high single digits. This forecast is driven by the need to offset rising claims and increased allowances for natural hazards. - read more

Surge in Cyber Insurance Adoption Among Australian Businesses

16 Nov 2025: Paige Estritori

In the past year, BizCover, a leading small business insurance provider, has reported an almost 50% rise in sales of cyber liability insurance. This significant uptick underscores the escalating awareness and concern among Australian businesses regarding cyber threats. - read more

IAG and Ag Guard Forge Partnership to Elevate Crop Insurance for Australian Farmers

14 Nov 2025: Paige Estritori

In a significant development for Australia's agricultural sector, Insurance Australia Group (IAG) has announced a strategic partnership with Ag Guard, a specialist rural underwriting agency. This collaboration will see Ag Guard managing the underwriting for IAG-owned CGU and WFI's crop insurance portfolios starting June next year. - read more

Click for more Insurance News