IFA rails against regulatory levies

Parliament approved financial services regulations which lock in the fees advisers and qualifying financial entities will have to pay to be licensed.

An adviser will have to pay $1,120 for the initial authorisation, then $560 in ongoing annual fees. That's down the $1,385 flagged by the Ministry of Economic Development, though the ongoing fee is higher than the $410 of the first estimate.

Qualifying financial entities will have to pay $4,780 to register, with ongoing fees of $4,500, compared to the proposed $4,630 registration and $1,140 annual fees.

The fees are inclusive of GST, and the registry confirmed the fees will rise when the increased tax comes into effect in October.

"While there are no real surprises in these numbers there are still issues that advisers need to be aware of and continue to debate for the benefit of the regulators. That will be setting the so called levies," said IFA President Nigel Tate.

Tate said the cost of legislation will likely run into millions of dollars, and it should be split evenly between taxpayers and industry, as consumers will ultimately benefit from the regime.

"This in my mind is an unfair burden on the advisers as I feel this should be shared between the profession - that is all advisers - and the general public for whom these regulations were designed to benefit," Tate said.

"Central government should be carrying at least half of this cost on behalf of the general public," he said.

The government pumped in an extra $12 million last year to help fund the implementation of a regulatory body for advisers, with an expectation it will become self-funded through levies and fees by the 2011/12 financial year.

Comments from our readers

On 19 August 2010 at 7:52 am Independent Observer said:

Whilst it is difficult to accurately complete the maths for this, I suspect that the proposed registration fees will fall well short of the compliance and administrative requirements to police the industry.

In the end the consumer (semantics: “taxpayer”) pays directly through increased advisory fees, or government support to fund any shortfalls.

On 19 August 2010 at 8:37 am Craig Myles said:

While it is pleasing to see the IFA taking a strong stand on this issue. This part of the compliance cost structure is only a small part of the overall cost of compliance placed on financial advisory businesses as a result of the FSP and FAA.

This legislation imposes a very high cost regime.

On 19 August 2010 at 10:36 am Majella said:

For those who have the option of NOT becoming certified, this looks like a reasonable incentive to opt out. a business can still be run in line with regulatory requirements, but this (yet another) cost is at least optional - as is the DSR expense.

IFA rails against regulatory levies

The Institute of Financial Advisers is railing against the levy regulators will charge advisers to pay for the new regime, after Parliament approved regulations locking in the fees for authorisation.

Thursday, August 19th 2010, 6:00AM 3 Comments

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