Alexander Euvrard
Self-licensing specialist My Dealer Services (MDS) has written to Treasury asking it to assess the FSC’s recent whitepaper on proposed ASIC industry funding levy changes against what it says is a clear motive to force consolidation of smaller licensees.
In a submission sent to the government body, MDS said it strongly rejected the FSC White Paper’s proposal to lift the fixed licence level component of the ASIC levy from $1,500 to $25,000 (Option A) or $40,000 (Option B) offset by a lower per-adviser fee.
Under this proposal a single adviser practice would face an increase of roughly 600% under Option A and over 950% under Option B while a 300-adviser licensee’s levy would fall by around 23%.
It would mean 15 out of 16 advice licensees, more than half of whom authorise only one or two advisers, would pay more and only 1.5% of licensees who had 100 of more advisers would pay less, MDS Director and Founder Alexander Euvrard and MDS Head of Strategy, Ashley Mahadeea said in the submission.
“Essentially the entire redistribution flows to the 28 licensees at the top. Those licensees, carrying 5,744 advisers or 37.9% of the profession would collectively save in the order of $2.8 million a year under Option A and $9.3 million under Option B.
“That is the transaction at the heart of this proposal: an eight-figure annual transfer from more than 1700 of the smallest advice businesses in the country to a group of large licensees small enough to fit in one (albeit large) boardroom.
“The White Paper’s own modelling assumes that 15-20% of licensees would consolidate or close as a result. That is not an unintended side effect to be managed; it is the design working as intended.
“A levy whose stated modelling anticipates the exit of one in five licensees, overwhelmingly the smallest, is an industry restructuring instrument, not a cost-recovery mechanism and it should be evaluated as such,” Euvrard and Mahadeea said.
“In our view the proposal is not a funding reform. It is a redistribution of regulatory cost away from large licensees and onto small ones, dressed as risk pricing and it would operate as a structural barrier to the self-licensed model at precisely the time that model is delivering strong growth and client outcomes,”
“Many large adviser groups view the rapidly growing self-licensed sector as a competitive threat; this proposal would materially blunt that competition,” they added.