Major accounting groups CPA Australia and Chartered Accountants ANZ (CA ANZ) say they do no want re-establishment of the accountant’s exemption – they want changes that go a whole lot further with respect to accountants giving advice.
In the face of calls by the Institute of Public Accountants (IPA) for the re-establishment of the accountant’s exemption, the two big accounting organisations said they wanted a wholesale review of the advice sector which had become mired in complexity.
The two organisations issued a joint statement arguing that reinstating the accountant’s exemption would amount to little more than putting a band-aid over a very deep wound.
It said that both organisations strongly believed that accountants should be able to provide services benefited their clients and supported the public interest “but reintroducing a mechanism that, due its extreme limitations, is no longer relevant in this current, increasingly complex financial advice environment is unlikely to achieve this objective”.
“There is widespread agreement amongst members that the current regulatory and licensing regime for strategic advice needs work,” Group Executive, Advocacy and International, Simon Grant said. “So rather than putting a band-aid over a very deep wound, we need to look at the issue holistically and find a solution for strategic advice that is fit-for-purpose, permanent and serves Australian mums and dads.
“Both professional bodies are undertaking extensive consultation to find a solution, ranging from a public practice member survey to nation-wide workshops to gather feedback.”
CPA Australia external affairs general manager, Paul Drum said the objective of the Future of Financial Advice (FoFA) reforms had been to ensure advice was in the best interests of clients and not put out of reach of those who would benefit from it.
“This has arguably not been achieved,” he said.
“CA ANZ and CPA Australia are calling for a wholesale review of the current financial advice frameworks to address regulatory complexity,” Drum said. “This complexity has been caused by years of layered regulatory reforms, without appropriate consideration to ensure these reforms are meeting their policy intent.”
“The wholesale review must identify policy changes needed to ensure that consumers can access quality affordable advice from their choice of trusted adviser.”
The two accounting bodies said they had submitted on behalf of members and in the public interest that:
• Tax is a key consideration for the majority of financial planning strategies, it is material to the advice and recommendations and not incidental.
• The accountants’ exemption only permitted the recommendation to either establish or wind up an interest in an SMSF. It was so limited that it did not even allow a recommendation to not establish an SMSF. Restoring such a limited exemption is not going to address the need to enable affordable, accessible and quality advice by trusted advisers.
Comments
I have no problem with Accountants playing in the space. They just have to abide by the same BID duties that financial planners do. That means advice in writing, something that have never done.
Just yesterday i saw a client in regard to insurances. He had a SMSF which was set up by his accountant and whilst doing a Fact Find i discovered that he used to have a Defined Benefit superannuation policy through his current employer (who he had been with for 18 years) . I asked to see a copy of the advice from his accountant in regard to the SMSF as i was curious as to how the accountant could have justified closing a Defined Benefit super in favour of a SMSF without insurances.
Both he and the accountant could not produce any such advice documents other than a brief 3 page statement saying the client had asked for a SMSF (which the client denied asking for and was instead sold).
Now. As there is no advice paperwork the client has no recource to sue as the accountant can say he was acting on the wishes of the client, even though the outcome has cost many thousands of dollars and the clients super balance has been eroded by poor investments and lost the benefits of his wonderful company super. Thankfully i was able to set up some insurances.
Accountants. You should not be able to provide financial advice to clients. You dont know what you are doing and the only way to learn is to adhere to the rigerous compliance and training standards as qualified financial advisers.
Allowing accountants to provide unregulated, unsupervised and undocumented advice is similar to alloing a dentist to diagnose and treat lung cancer patients. Yes they are in a similar field however they have very limited knowlegde in the field they are assisting their patients with.
I work in compliance dealing with limited licenses. Giving accountants a free pass on the corps act would be a disaster. 90% want to do the right thing, but only 30% know enough to do it properly. The unintended consequences of this would be unmitigated. A significant portion are order takers and there is an inherit conflict that could never be managed. Let's be clear here, the industry bodies see the opening and want to wedge this wide open and will work to do it. This has nothing to do with looking after clients.
No problems. BUT same rules, regs and requirements as advisers....NO CARVE OUTS!
Like with SOME advisers, there are SOME accountants (CPA, CA) that are completely incompetent and as with advisers there needs to be the appropriate compliance requirements/mechanisms to weed them out.
If a Chartered Accountant cant recommend a superannuation contribution strategy or an industry, retail, wrap or SMSF then the world has gone mad.
Of all the financial advice complaints made over the last 20 years -I wonder how many were against Chartered Accountants?
There is a simple reason complaints against accountants and CA's have been limited and that's because there is no paper trail for the advice provided to clients because unlike documented advice advisers give, its all verbal. I work with a number of accountants, all of whom I will say are generally very good accountants, but the amount of SMSF's we come across that are sitting in cash is alarming. When we quiz the client about what prompted them to open the SMSF and what do they understand about their fund, on average 95% of clients say "my accountant told me to set it up" and "I dont really understand it, so have done nothing with it". Factoring in the annual return, financials and audit costs, its quite a nice little earner for most accountants, not to mention highly conflicted advice!
Many more accountants go to jail every year than planners
Just get hold of a current copy of the internal ca magazine acuity, or in the black of CPAA, and go to the very back end of them, and see how many members are regularly removed or breach the by-laws.
you will find it's a half a dozen or more from each body minimum each month.
know why you think it's hundreds of financial planners and not accountants that are the problem?
we get plastered on every newspaper in the country, and you guys get to quietly reprimand your members in private on the last page(s) of your internal magazine distributed to your members only, by subscription.
that's the difference between them and us !
go on, test it, I don't make anything up. Because, I am a v.smart fp, I know.
oh, and btw, you think you give great tax advice do you?
here is some actual fact for you, from afr article July 12, 2019, "ato to more carefully probe tax agent behavior...."
paragraph 9 top down, quoting deputy commissioner of ATO, Alison Lendon, "we are taking further steps to address the error rate in agent-prepared returns, which is currently higher than the error rate for self-prepared returns"
that's just tax. here is what the latest audit firm inspection report from asic said. Direct Quote From ASIC. google it. it's all there for you.
Thursday 24 January 2019 19-013MR Audit inspection findings for 2017-18
"ASIC conducted inspections of 20 Australian audit firms of varying sizes. In 24% of the total 347 key audit areas that ASIC reviewed across 98 audit files, auditors did not, in our view, obtain reasonable assurance that the financial report was free from material misstatement"
what else do accountants do? oh wait smsf's. i'll get back to you with that shortly
https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporati...
go to the link and read the first submission from the institute of certified management accountants.
it's enlightening and then come and tell us all about it
Whilst I am qualified as a chartered accountant, financial adviser and SMSF specialist and hence do not have the problem that most accountants have. The comment that I hear most often from clients is "the old accountant would not give me any advice". I then have to explain that they are not qualified to do so. It is clear to me that when a client gets their super fund financial statements prepared that they are expecting some advice on the performance and investments of the fund. They cannot get this under the current system. It needs a full review and FASEA needs to understand that highly qualified and ethical accountants do not need to sit an ethics exam so that they can advise. When I prepare company financial statements I provide management advice but if I do not have special qualifications I cannot provide this with super funds. Ridiculous. At the same time the quality of the tax advice that I see from many financial planners leaves a lot to be desired. The playing field is not level and the only people to suffer are the clients.
Why would a highly qualified CA spend thier time giving smsf advice? Or should I say suggesting it and not taking into account the clients personal circumstances or alternatives. Wouldnt they have bigger fish to fry? I am highly qualified and still have to do the Ethics course, but I dont hold myself up that high that I cant come down for 3 months and polish it off. There are great people in both areas, why the need to fight for the same clients and continually whisper in the corner about each other is beyond me. I assume its due to the fact that tax advice as a whole is dying so you guys need this to keep operating. Thats fine, do the fasea requirements like the rest of us.
"...they are expecting some advice on the performance and investments of the fund" send them to a qualified financial adviser...I understand that you are one but for those that aren't there will be a very uneven playing field. On one hand an Accountant can give verbal advice to "just buy these 10 blue chips" with no Best Interest Duty to protect the client and on the other hand a Financial Adviser has to provide written advice and demonstrate they have met the Best Interest Duty. There will be a flood of financial advisers electing to do the extra study required to get the Accountant expemtion if this gets up...
whilst? who says whilst. while is better.
pfft.. highly qualified CA?, the ca qualification is a 5 unit graduate diploma with a 5th capstone subject which is a wishy washy case study.
most financial planners already have a graduate diploma with 8 units or higher quals like a masters
i have a 12 unit masters degree
I am highly qualified, not some CA with a 5 unit grad dip
The problem with FOFA is that the stated "objective of the Future of Financial Advice (FoFA) reforms had been to ensure advice was in the best interests of clients and not put out of reach of those who would benefit from it" is totally untrue.
The objective of FOFA was the exact oposite to this. The objective of FOFA (which was dreamt up by the FSC) is to limit access to FULL advice for the majority of clients by culling adviser numbers and making it more expensive to provide full advice, thus allowing the big institutions to push their junk products through the General Advice alligned channel without having to comply with BID or do statements of advice which will increase their underlying profit and share prices to the detriment of the mum and dad clients who will be forced to deal directly with the product manufacturers.
I have no problems with accountant providing advice as they are in a position of trust and at least equally ethical as everyone else in society (not including lawyers who are all self interested and evil). However they, and everyone else selling a financial product should all have to adhere to the same rules, compliance and training as everyone else selling financial products.
Why cant we just have one regime and process for everyone dealing with financial products and be done with it. SOA and best interests duty for EVERY financial product sale.
my sentiments exactly. respect. must be another smart highly qualified fp, just like me.
That is backed by the same exact tactic being used against mortgage brokers to clear the way for CBA et al. CBA behind FPA, CBA behind FASEA, CBA given the greatest air time against mortgage brokers at RC.
I am currently doing CPA and CA is 5 exam.I have work for numberyears in private pratice and now i work for a company.
While working for private practice ever 2 client will say " my last was not good as my friend got more tax refund than me". so i asked my manner and he decoded it for me. So clients always make some one look bad. I belive 2 institutes are run by smart heads let them do their job.
Yes, before sone one provideca service/ advice need to know what they are talking about and as a proffessional they need to be hold accountable.
"so clients always make some one look bad"
let me get this straight magoo. a client comes to you, for tax advice, and you let them decide what is and isn't an allowable deduction?
is that right? it's the client's fault is it?
Stop arguing amongst ourselves! This is exactly the reason we have the dogs breakfast we do. If the two professions worked together for client benefit (best interests) maybe we could simplify the whole process for ourselves and our clients. Grow up!
before you tell others what to do, please ensure you read all the comments first.
why don't you go and tell accountants to grow up. it is often them, not financial advisers, who think they are more qualified and give better advice. read some of their idiotic posts. i have only posted in defense.
in fact, the opposite is true, they aren't qualified and they give poor advice.
i will keep shouting it from roof tops, until they shut the hell up and stop telling me how well they are qualified. the data does not support their theory of how good they are. so their theory is wrong. the opposite is true. and the law says qualification as an accountant alone is insufficient to practice as a financial planner.
no amount of their lobbying is going to change the law. they will have to be licensed and educated like everybody who wants to practice as a fp
and no, it's not the constitution, it's not mabo It's the L.A.W. and, I rest my case.
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