The Financial Planning Association of Australia (FPA) has called on the Federal Government to broaden its proposed Compensation Scheme of Last Resort (CSLR) as well as extend the freeze on the ASIC levy for another year, in the upcoming Federal Budget.
In its pre-budget submission, the FPA has also called for all financial advice to have tax-deductible status; and for the Australian Taxation Office and Centrelink to improve their online access arrangements to ensure financial planners are able to act on behalf of their clients.
Sarah Abood, CEO of the FPA, says the CSLR and ASIC levy are two issues of particular importance to members in the current environment, and the FPA continues to prioritise them in its discussions with both government and industry.
In its Pre-Budget submission, the FPA says the current CSLR Bill (tabled in September) is too narrow in scope, provides inadequate coverage to consumers, and doesn’t seek to address some of the underlying causes of unpaid determinations, such as appropriate professional indemnity insurance.
As a result, consumers are left unprotected and financial planners are footing the bill.
“We believe the Government should amend the proposed legislation to establish the scheme so that its design reflects a broader base that includes all participants in the financial services industry,” the FPA says in its submission.
“This could be achieved by broadening the scope of the scheme to include the entirety of the jurisdiction of the Australian Financial Complaints Authority (AFCA).
“Such amendments would ensure equity for industry and consumers as well as long-term sustainability for the scheme.”
The FPA also calls on the Government to freeze the ASIC industry levy for a further 12 months to ensure cost certainty for the sector during FY2022/23, while Treasury reviews ASIC’s Industry Funding Model.
In addition, the FPA says the freeze for financial planners should be extended to all industry sector participants who have been adversely affected by inexplicably significant ASIC levy fee increases.
“The current freeze has recognised the negative impact that ongoing significant ASIC industry fee increases have had on the financial services sector. We acknowledge and appreciate the Government’s role to date in trying to control these spiralling increases for this sector,” the FPA says.
“Many practitioners are sole traders or work in small and medium-sized practices, and their ability to absorb any additional regulatory costs is extremely limited.
“To provide certainty to the profession and provide adequate notice of any change, which may require planning for business models to adapt, the review should be completed prior to the expiration of the ASIC levy freeze.
“We look forward to working with parties and stakeholders on policies and initiatives that contribute to affordable financial advice for all Australians and a sustainable financial planning profession for the future.”