TPB warned it risks accelerating adviser exodus

The Tax Practitioners Board (TPB) has been told that financial advisers already provide extensive initial and ongoing disclosures to clients and that seeking to impose the need for Letters of Engagement is going too far.

In a submission directly addressing the TPB proposal, the Association of Financial Advisers (AFA) said financial advice disclosure and client consent requirements “are extensive and the addition of further obligations is likely to deliver limited additional benefit, whilst also driving up the costs of providing financial advice”.

“In our view, the requirement for tax (financial) advisers to provide an extensive engagement letter, including doing so on an annual basis for ongoing clients, is excessive and unnecessary. We do not believe that this will serve any beneficial purpose for clients who will be inconvenienced as a result,” the AFA submission said.

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In doing so the AFA repeated the assertions contained in an earlier submission to the TPB noting that the proposal was being put forward “at the same time as a large number of advisers are reconsidering their intention to remain in the financial advice profession”.

It said the key drivers of an expected exodus of financial advisers were the new education standards and the likely impacts from the Banking Royal Commission.

“The Royal Commission has recommended that clients be required to provide specific authority for the continuation of fees on an annual basis (Recommendation 2.1). The new FASEA Code of Ethics also refers to additional requirements to obtain client consent for services being provided and ongoing remuneration,” the submission said.

“The net impact of all these changes is to substantially increase the cost of providing financial advice, which will have a much greater impact upon average Australians seeking financial advice, where it may no longer be accessible or affordable.”

“This proposal from the TPB, along with the Transfer of Business proposal, is likely to have a further negative impact upon the viability of the financial advice sector.”

“On the grounds of the existing disclosures already provided, and the anticipated further changes to flow from the Royal Commission with respect to client renewal arrangements, we recommend that this TPB engagement letter proposal does not apply to financial advisers, and certainly not for the next two years whilst other regulatory issues are finalised,” the AFA submission said.

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Appealing on the grounds outlined is a waste of time. The TPB doesn't care if there is an exodus, in fact they would like to see all advisors removed from this space.
The key issue is the gross over reach by a mediocre body seeking to expand its remit and boost its coffers. Advisors are now the host body for numerous parasites on a fee feeding frenzy.
What has the TPB done for me to justify the grossly excess fee levied?
Add them to AFCA, FASEA, ASIC, licencees, and other levies.
This is greed pure and simple.

Do you realise that as a financial planner, and under the new Code of Ethics you will be required to:
(a) have all new clients give free, prior and informed consent to all benefits you and your principal will receive in connection with acting for the client, including any fees for services that may be charged, and;
(b) All existing clients must give you free, prior and informed consent as soon as practicable from 1 January 2020.

Include the TPB requirements in this consent.

We formally deal with more than 10 accounting firms and none of those have clients sign annual engagement letters, and when I queried them, none indicated they were of the opinion this was any official requirement in their world. Clearly it is an unfair approach, or if actually required for them, a farce as it is not monitored or policed.

Where does it stop? The snowball of red tape is only getting bigger, with policy makers and regulators trying to justify their positions by simply rolling out rushed and ill-thought out proposals for the sake of it. Once again it is the consumer that loses as advice will simply become un-affordable as advice practices spend the majority of their time dealing with additional process rather than value adding advice! Look forward to the day when we can all go back to dedicating all our time to advising and our clients rather than dealing with the constant stream of ineffective rubbish that is being proposed by those in the "sheltered workshop"

next thing there will be an agreement from a related government body that there is indeed a boogeyman, and then there will be a another Body body set up to monitor and ensure we are protected from the boogeyman, and of course this will need to be well funded and resourced with each and everyone of us required to pay another levy to assist with the protection from said boogeyman. Dont be fooled, fear is the number one tool when it comes to trying to control people, and this is yet another example of fear mongering to the wider community than indeed they need to be protected from everything

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