The implementation of the controversial APES 230 professional standard for accountants who provide financial planning advice has been delayed, according to a statement released by the Accounting Professional and Ethical Standards (APES) Board last week.
The proposed APES 230 Standard includes a ban on commissions for life risk advice, and dictates the forms of remuneration available for referral arrangements between accountants and third parties (see: APES 230 Decision – Risk Commissions Will Be Banned). The Standard was released for industry consultation last year, with numerous submissions to the Board calling for the ban on commissions and the guidelines relating to referral arrangements to be removed.
In November last year, the two largest Australian accounting bodies (the Institute of Chartered Accountants and CPA Australia) issued a joint submission to the APES Board, calling for the removal of the ban on risk commissions. Despite this feedback, the APES Board made a determination at its Board Meeting later that month to proceed with the draft APES 230 Standard, saying it should be issued ‘without delay’.
However, the Board has subsequently had a change of heart, issuing a statement last week which announced that, while the Standard was in the final stages of drafting, the implementation of APES 230 would be delayed until 1 July 2014.
According to the APES Board, it has ‘received additional representations from the Institute of Chartered Accountants and CPA Australia,’ and is now considering these representations. As a result, the APES Board said it would delay the commencement of the Standard to allow stakeholders sufficient time to implement the measures prescribed by APES 230.
The Institute of Public Accountants (IPA), which responded to the Board’s decision to proceed with APES 230 by saying it would issue its own ‘pronouncement’ exempting its members from the Standard, told riskinfo that it had not changed its position.
… there is no change in the IPA’s position
“It’s great news that they’ve (the APES Board) decided to delay the implementation, but there is no change in the IPA’s position. We are still proceeding with our own pronouncement,” said Vicki Stylianou, IPA Executive General Manager – Public Affairs.
Ms Stylianou told riskinfo it would take a “complete about-face” from the APES Board to prompt the IPA to put their pronouncement on hold. “In terms of providing certainty for our members, we are looking to release our pronouncement in line with the Future of Financial Advice (FoFA) implementation date of 1 July 2013,” she said.
When asked to comment on what, if anything, the APES Board may look to change within the current APES 230 wording, Ms Stylianou said she wouldn’t be surprised if there were some amendments to the ban on commissions for life risk, but that there was also a strong chance that the APES Board would retain their current position.
“The whole process has taken a very long time, and the Board have gone out of their way to ensure that there has been significant consultation. But they will have to make a decision sooner rather than later, and that may be to proceed with the Standard as drafted.”
While the Institute of Chartered Accountants and CPA Australia would not comment on the latest development, a statement on the Institute’s website said that since the November Board Meeting the two bodies had ‘urged the APES Board to more fully consider the challenges regarding APES 230’s implementation’.
A final determination in relation to APES 230 is expected from the APES Board in early February 2013.
