by David Chaplin
The IFA estimate that in addition to government agency charges totaling $1,795, single-person AFA practices would have to stump up with a further $1,000 to meet complaints body and competence assessment costs in the regulatory regime's first year of operation.
In subsequent years, it says, AFAs would probably pay $470 to meet basic compliance costs.
However, the IFA figures do not include estimates of any increased PI cover expected under regulation, ongoing education costs or further compliance expenses such as producing an adviser business statement.
In a newsletter the IFA also says the Qualifying Financial Entity (QFE) regulatory fees - set at $4,630 in the first year followed by an annual $1,140 charge - appear inequitable compared to AFA rates.
"Built into the AFA and QFE initial application fee is the cost of establishing the assessment system to support minimum competency standards," the IFA says. "The impression is that this is largely loaded onto the individual AFA applicants, even though QFEs will probably use the assessment system for their advisers since they will have an obligation to ensure their advisers meet the minimum competency standards."
While the extra regulatory costs may force some advisers to question the value of industry association fees, the IFA says a recent member survey suggested most would choose to remain in the group post regulation.
The survey showed roughly 80% of IFA members would be AFAs under the coming regime and approximately 35% would belong to a QFE. Only a tiny minority, close to 1%, of those surveyed indicate they would leave the industry once regulation comes into force.
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