Amended APES 230 standard passed
The Accounting Professional and Ethical Standards Board (APESB) has ratified the amended version of the APES 230 standard.
The APESB has released its services guide on the APES 230 following its concessions last week on asset-based fees and insurance, but has given strong warnings that they will be monitoring the situation.
The Board will only permit the use of asset-based fees and third party payments in circumstances where the accountant is able to obtain informed consent from the client and complies with the additional stringent reporting requirements specified in APES 230, the organisation stated.
Those additional requirements include annual disclosure to the client about actual and estimated amounts of fees, comparative quotes in the case of insurance, and disclosure in relation to the impact of changes in fees.
However, the board strongly recommended that clients be charged on a fee-for-service basis for financial planning services to minimise the opportunity for conflicts of interest, APESB chair Kate Spargo said.
She also warned that the APESB would monitor and review the alternative remuneration methods of asset-based fees and third party payments to evaluate their effectiveness in practice.
“If the safeguards prove to be inadequate, we will address the issue of conflicted remuneration in the future,” Spargo warned.
The concession is subject to the board’s ongoing review processes.
The board has also decided to extend the best interests duty to all clients and financial planning services, including capturing wholesale clients and activities such as mortgage broking.
These requirements are new and untried in financial planning and it will be important to monitor how well they work as safeguards, the APESB stated.
Spargo acknowledged that the APESB was operating within the new framework of the Future of Financial Advice, and the APES 230 was finalised within that context.
The majority of the standards will be effective from 1 July 2014, with the remuneration provisions commencing from July 2015.
The changed approach of the APESB reflected strong lobbying by industry organisations, including CPA Australia and the Institute of Chartered Accountants, in respect to asset-based fees and the treatment of insurance advice.
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