The Morrison Government has agreed to reduce the levy that advisers have to pay for the next two years to support the corporate regulator’s supervision, following an outcry from the industry over the proposed fee hikes.

Treasury will also conduct a review of the Australian Securities and Investments Commission (ASIC) funding model while the temporary levy relief measure is in place, Treasurer Josh Frydenberg and Financial Services Minister Jane Hume said in a joint statement today.

They say the review is to ensure the funding model remains “fit for purpose” in the longer term given structural changes taking place in the advice industry.

The review will commence next year and will be undertaken in consultation with the Department of Finance and ASIC.

Peak bodies representing advisers and planners who have criticised the proposed fee hikes and pushed for a change to the levy formula say the government announcement is a “significant milestone” for the industry.

“We have been calling for a review of the flawed model since it was first proposed and then introduced three years ago,” Financial Planning Association CEO Dante De Gori said.

“Today’s news will provide some certainty and stability to financial planners, allowing them to provide more affordable financial advice to Australians.”

Association of Financial Advisers National President Michael Nowak says today’s announcement is a “first step” towards addressing the impact of regulatory reforms on the profession.

“There is much more to be done to ensure that post the reforms financial advice can still be delivered in an efficient and cost-effective manner, thereby ensuring that it is available to the majority of Australians,” he said.

“The ASIC funding levy has been the subject of intense discussion at parliamentary hearings throughout the course of 2021, and we thank all those politicians who have picked up this cause and lobbied on behalf of the financial advice profession.”

Financial Services Council CEO Sally Loane also welcomed the measures, saying it shows the government recognises the cost pressures facing advisers.

“The temporary relief will give the 19,000 advisers in the sector hope the government understands the challenges facing the financial advice industry and will take further action to reduce the costs of regulatory burden on advisers,” she said.

The government says under the two-year levy relief plan, ASIC levies charged for personal advice to retail clients will be restored to their 2018/19 level of $1142 per adviser for the next two years. The next two years refer to 2020/21 and 2021/22.

It says the flat per licensee charge will remain at $1500.

The government says the actions represents a substantial reduction relative to the level estimated in ASIC’s 2020/21 Cost Recovery Implementation Statement of $3138 per adviser.

The sub-sector as a whole will pay an estimated $46 million less in ASIC Levies in 2020/21 alone, with further savings flowing in 2021/22, according to the government.

“The freeze in the per adviser levy will provide financial advisers with the certainty they need over the next two years to deal with the impacts of COVID-19 and further regulatory reforms making their way through the Parliament, including the introduction of a Single Disciplinary Body and a Compensation Scheme of Last Resort,” Mr Frydenberg and Ms Hume said.