Despite widespread criticism, and a rejection of the proposal by the two largest accounting bodies in Australia, the Accounting Professional and Ethical Standards (APES) Board has decided to proceed with its ban on insurance commissions as a form of remuneration for accountants providing financial advice services.
Financial Planning Services which are entered into from 1 July 2015 will be required to follow fee for service principles
In a statement issued after its Board Meeting at the end of last week, the APES Board said it would proceed with measures to prevent accountants from receiving commissions on life insurance product advice, and that the APES 230 Standard should be issued without delay.
In a concession to industry feedback, however, the APES Board is now offering the following transitional provisions:
- Commissions for Financial Planning Services which are entered into prior to 1 July 2013 in respect of life insurance, other risk contracts and the procurement of loans can only be accepted by members until 30 June 2018, where the member provides additional services in respect of those contracts or loans;
- Commissions for Financial Planning Services which are entered into between 1 July 2013 and 30 June 2015 in respect of life insurance, other risk contracts and the procurement of loans can only be accepted by members up until 30 June 2018, and only if the member makes specific disclosures to and receives informed consent from Clients; and
- Financial Planning Services which are entered into from 1 July 2015 will be required to follow fee for service principles as described in the July 2012 Exposure Draft.
The APES Board further clarified that members would be able to accept trailing commissions for financial planning services entered into prior to 1 July 2013 (the recommended start date of the new Standard), as long as the member does not subsequently provide further services to the client in respect of that product.
The ban on third party payments was also retained, despite concerns raised over the impact this would have on referral arrangements between accountants and financial advisers.
According to the Board’s statement, it will work towards issuing the final APES 230 Standard by the end of 2012.
Prior to the Board Meeting, the Institute of Chartered Accountants Australia and CPA Australia issued a joint submission to the APES Board, calling for the ban on life insurance commissions to be removed from the Standard. Click here to read more.
A full analysis of the APES 230 Standard and the impact on advisers and clients is featured in the upcoming December 2012 edition of riskinfo Magazine.
What a load of BS ! How can a board who represents the 2 major bodies of accountants – Institute of Chartered Accountants and CPA Australia deliver such a decision when they dont agree to it. This decision doesnt mean that consumers automatically receive better quality advice. The sooner the current government is kicked out of office the better.
This is a Board gone crazy. This standard makes accountants uncompeteitive in a competitive industry as it only covers accountants and not the total industry. Quality of advice will not improve. The FPA and its members will be laughing their proverbials off
This will simply make accountants restructure to ensure that they are not caught
Anarchy will reign
How can the APES board reject the recommendations of its own two creating bodies and implement something which the members & the two professional accounting bodies don’t want and at no benefit but actual detriment to consumers? Time to sack the APES board and replace them with real accounting members who operate in the real world and not in fantasy land.
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