The Federal Government will be increasing broker and adviser licensing fees to cover the cost of the Future of Financial Advice (FOFA) reforms.

The cost of applying for an Australian financial services licence will rise from $287/$575 to $1485 for a corporate and $159/$351 to $825 for an individual.

The renewal fee for licensees will rise from $351 to $549 for corporates and from $144 to $225 for an individual.

The increased fees will cover the additional $23.9 million the Australian Securities and Investments Commission (ASIC) requires to implement the FOFA reforms.

According to papers from last week’s Federal Budget, ASIC will spend $3.1 million in the next year implementing the reforms but expects to receive $4 million from the increased fees.

In the 2014 financial year, expenditure is forecast at $7.7 million and income at $10.4 million.

It is not until the 2016 financial year that income and expenditure will match each other at $5.3 million.

Financial Planning Association GM Policy and Government Relations Dante DeGori says the increased costs will cause concern for many businesses.

“The FOFA reforms were meant to provide greater accessibility to more affordable advice for all Australians,” he said. “However, when costs to advisers and licensees increase, so too does the administration work.

“Such a move is counter to reducing the cost of advice and is a backwards step.”

The Government has also allocated $82.4 million, spread over four years, to the Australian Prudential Regulation Authority to cover the cost of forthcoming global regulatory reforms.

The Budget papers state this funding will be fully recovered from financial sector levies paid by insurers and super funds.

Also in the budget are changes to the capital gains tax (CGT) treatment of certain compensation payments and insurance policy proceeds through a trust.

This CGT exemption means payments to a trust, from the 2006 financial year, will now be treated in the same way as for an individual taxpayer.

The tax law amendment also has maintained the CGT exemption for insurance policies and compensation payments in super funds.

Human resources consultant Aon Hewitt says some other Budget moves will be creating issues for insurers.

The Government’s incentive to employ mature workers will require insurers to provide insurance cover for longer. Presently many death and total and permanent disability policies cease at 65 years old.

“The lack of insurance cover for older workers could be seen as a form of age discrimination,” Aon Hewitt Principal Ingrid Selene said.

“Organisations should consider seeking to extend the age limits in their insurance cover to ensure all employees are provided with some protection.

“Insurers also need to adapt their policies to reflect the new reality.”