The Financial Planning Association (FPA) has called for a review of the levy funding model used by the corporate regulator to support its regulatory work.

In its 2021/22 budget submission, FPA says since the funding model started in the 2017/18 financial year, actual levies that planners have had to pay exceeded estimates made by the Australian Securities and Investments Commission (ASIC).

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.

In the last financial year, planners were told to expect to pay $1571. However, FPA says it has forecast the levy will be much higher, at $2000, by the time invoices are sent to planners.

FPA says the uncertainty over how much to set aside for ASIC, as well as rising levy cost, is hurting the industry.

It is proposing a more “predictable annual levy” and one that constrains year-on-year increases to better reflect the capacity of the financial planning profession to support regulatory costs.

“As it has been three years since the levy was first introduced, it would be an appropriate time to review its implementation and impact on the financial services sector,” FPA CEO Dante De Gori said.

“The levy amount each year has proved to be unpredictable, which makes it practically impossible for a financial planner to effectively budget for this business cost.

“As a first step in addressing these twin challenges of predictability and dramatic levy increases, the government should undertake to review the ASIC industry levy.”

He says the review should consider whether the current method of recovering the entirety of ASIC costs relating to financial advice through the levy is appropriate, particularly given that much of the additional cost being recovered relates to specific enforcement action against a small number of financial services businesses.

“It should also consider whether the operation of the levy, and in particular its unpredictable increases, is having a negative impact on competition and the viability of financial planning businesses,” Mr De Gori said.