Opposition continues to grow against the proposed APES 230 Standard, with two industry associations saying the regulations would add unnecessary costs to the advice industry.
The Institute of Public Accountants (IPA) and Financial Services Council (FSC) have both announced their opposition to the Standard, saying it is not in the best interests of accountants or consumers, and will add unnecessary obligations that would increase the cost of financial advice.
APES 230 sets out the professional and ethical standards for accountants who provide financial planning advice. Among the proposals contained in APES 230 is a ban on commissions for all products, including life insurance, to apply retrospectivley. Currently in draft form, the standard was issued for public consultation earlier this year (see: Concerns Mount Over Accountants’ Commission Ban).
… issues of practice management and fee structures are commercial decisions to be made by members and should not be matters for consideration by the APESB
In its submission to the Accounting Professional and Ethical Standards Board (APESB), the IPA stated it was ‘…of the view that, other than in exceptional situations, issues of practice management and fee structures are commercial decisions to be made by members and should not be matters for consideration by the APESB.’
The Institute also outlined its concerns regarding the retrospective nature of the proposed standards, which would see the ban on conflicted remuneration extend to existing clients.
IPA CEO, Andrew Conway, said the measures contained within APES 230 would reduce the ability of consumers to access competent and affordable financial advice, and that he saw no reason for a different standard to be applied than that imposed by the Future of Financial Advice (FoFA) reforms.
“The IPA is prepared to continue consultation with APESB to ensure a balanced standard is developed; one which delivers a positive outcome for consumers and the profession,” Mr Conway said.
“However, if APES 230 is adopted by the APESB in its current form the IPA will move to issue an alternative Pronouncement that restores the obligations on members to mirror the provisions under the FoFA law reforms.”
According to Mr Conway, this Pronouncement would set aside APES 230, meaning IPA members could continue to operate under a commission model for life risk advice, provided they complied with the FoFA legislation.
The Financial Services Council (FSC) is equally concerned about the additional costs the proposed standards may impose on small businesses. In its submission to the APESB, the FSC said: ‘An over-arching concern with the proposals under Proposed Standard APES 230 is that they will add significant cost to the provision of advice by accountant financial advisers and, as a result, reduce access to advice from a professional well qualified to provide it.’
Specifically, the FSC used its submission to argue that:
- Commissions and asset based fees should not be banned as forms of remuneration
- Any requirements which impact remuneration practices should apply prospectively only
- The start date for the standard should be extended to 1 July 2016 to coincide with the new accountants’ licensing regime
… they will add significant cost to the provision of advice by accountant financial advisers
The FSC was also critical of enacting the new standard when ‘significant unknowns remain with regards to key aspects of the (FoFA) reforms on advice providers’, and recommended the APESB review and eliminate any requirements which replicate, contradict, or are inconsistent with FoFA legislation.
The Council said it believed the FoFA legislation and existing professional standards under which accountants operate were more than appropriate safeguards to protect the public.
Submissions on the standard were due by 7 September, however riskinfo understands that some industry stakeholders have negotiated an extension of time. A discussion on APES 230 was listed as an agenda item for the 14 September APES Board Meeting, but details of this discussion have not yet been made public.
I believe that Mortgage Brokers should not be allowed to sell Life insurance products. Every industry should be only allowed to specialist in their nature of study. Accountants should only specialize in tax, trusts, companies etc, mortgage brokers should only specialize in mortgages and financial advisors should only specialize in superannuation, investments, retirement planning, personal insurances, pensions and S.M.S.F. This will keep the referral system honest and clients will have a better understanding of what professional does what!
Gee it would be nice if the FSC could consider supporting advisers as much as it seems to be supporting accountants.
One cant help but feel the FSC thinks accountants are the future of risk advising. Either that, or the FSC thinks accountants won’t bother checking up on the FSCs anti-churning proposals when the annual “revenue review ” is under way.
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