An adviser group has called for a levy to be imposed on major banks and other financial services firms that have exited advice, as a way of alleviating the fee burden charged by the corporate regulator.

The Advisers Association (TAA) says the annual levy collected from advisers by the Australian Securities and Investments Commission (ASIC) to pay for its regulatory work should also extend to those that have stopped providing advice services.

“There should be some methodology that says ‘have you charged the people exiting the industry a fair share of the levy?’” TAA CEO Neil Macdonald told insuranceNEWS.com.au.

“The people who caused the problems have exited and aren’t paying for it. They have pulled out of their advice business. What we are saying is we should look at this process because we don’t think it’s working well.”

The advice industry in Australia has undergone a major consolidation, particularly in the wake of the Hayne royal commission hearings in 2018, with many offloading their financial planning businesses.

Since the ASIC levy funding model started in the 2017/18 financial year, actual levies that advisers have had to pay have exceed the estimates made by the corporate regulator.

For example, in the 2018/19 financial year, ASIC estimated each planner would be invoiced $907 but the final bill was 26% higher at $1142.

“Our view is that we don’t have an objection to a levy to contribute to the cost of supervision or monitoring by ASIC,” Mr Macdonald said. “We think $900, $1000 is probably the right price.”

Mr Macdonald says Treasury needs to take another look at the levy funding model and review the downstream impact of the levy on advisers and their clients.

“The normal process before implementing this kind of burden would include a stakeholder impact analysis. That may not have happened in this case and there are now some unintended consequences.”

He says advisers who have chosen to remain in the industry are still operating in a very tough environment. The burden of rising regulatory fees has been exacerbated by the COVID-19 fallout.

“The advisers remaining in the industry are those who are committed to the profession, who are committed to their clients and who are building strong practices that can withstand the changing times,” Mr Macdonald said.

“Expecting these advisers and their clients to just keep paying ever-increasing costs for the sins of the past, largely committed by the big end of town, is unconscionable.”