Boiling point

Hi Alex, an excellent coverage of the ASIC Funding Levy and CSLR issues. You have raised a number of really good points.  On the ASIC Funding Levy the big issue is advisers paying for unrelated activity. Non licensed operators is one big example. For Treasury (and ASIC), seemingly the argument is that the advice profession benefits from these unlicensed operators being confronted. I, for one, can't see how that is the case. Advisers already have as many clients as they need, with lots of Australians looking for advice. In terms of reputational damage from unlicensed operators being caught, then surely it is the responsibility of ASIC to make it clear when they take action against them, that they are not licensed operators, should not be confused with licensed operators, and by the way, you should make sure your adviser in licensed before you appoint them by checking the FAR.

ASIC does have some influence in the way the ASIC Funding model works. One classic case is the action that ASIC took against Westpac for what their call centre operators were doing in their super funds. Westpac argued they were providing general advice. ASIC argued it was personal advice and the High Court sided with ASIC. As a result, ASIC decided to charge 60% of the costs of this case to the personal financial advice to retail client sector. Despite this conduct being undertaken by a super fund business owned by a big bank, that said it was general advice, they chose to charge the majority of it to small business financial advisers. This does not stand up to the pub test in any way whatsoever. Their argument was that it was somehow beneficial to the advice profession to protect the boundary between general advice and personal advice. This only came out due to questions at Senate Estimates. Otherwise we would never know as there is no visibility of the money spent on these enforcement cases. Enforcement costs make up two thirds of all ASIC costs charged to financial advice, so it is really important. We need a model that works that is subject to transparency and challenge. We don't have that. And by the way, those who do the wrong thing, should be charged where-ever possible, rather than the innocent. There is no doubt that the super funds could have paid for the Westpac case.