The cost of living crisis spreads to financial advice due to Government Incompetence

Stu Varidel • Principal Financial Adviser

As a financial adviser and concerned Australian, I am profoundly dismayed regarding at the government’s handling of key legislative and regulatory matters directly impacting the costs and availability of financial advice for Australian consumers. This comes when our country is in the worst cost of living crisis ever.

At a time when the government aims to make financial advice more affordable and accessible, recent actions and proposed legislation contradict these objectives, leading to significant cost increases for consumers and further restricting access to professional advice.

Compensation Scheme of Last Resort (CSLR) Levy

The CSLR levy, unfairly placed on financial advisers, threatens the accessibility of quality advice for Australians. The CSLR was established to compensate consumers for losses due to misconduct by financial firms when firms cannot pay AFCA determinations. We support the intent; however, its implementation is flawed. The levy is applied retrospectively, forcing current advisers to cover past failures, notably those of Dixon Advisory, which failed before the CSLR’s establishment.

Assistant Treasurer Stephen Jones is indifferent to the staggering financial burden this will place on advisers, who must ultimately pass these costs onto their existing clients and Australian consumers seeking advice. This undermines the government’s stated objective to make advice more affordable and accessible. Estimates indicate that the CSLR levy will be $5,709, combined with the ASIC levy of $2,818, costing each adviser over $8,500.

Forcing advisers (and ultimately their clients) to pay for the misdeeds of a large, failed corporation like Dixon Advisory is unjust and economically unsustainable. The parent company of Dixon Advisory, Evans and Partners, earned over $174 million in revenue last financial year, yet advisers are being asked to foot the bill for their subsidiary’s failures. This is not only not right, it borders on evil.

Most financial advisers are small business owners who prioritise their clients’ interests. Holding them accountable for the failures of large corporations like Dixon Advisory is unjust and unsustainable. The retrospective application of the levy contradicts fairness principles and government promises, and the reduction of the government’s previously stated commitment to cover the scheme’s initial costs from 12 months to three is alarming.