Insurance commissions will be banned as a form of remuneration for accountants providing financial advice to clients, under a new ethical standards policy currently being drafted.<\/p>\n
The Accounting Professional & Ethical Standards Board (APESB), which sets the code of ethics and standards by which members of Australia’s three professional accounting bodies must abide, is developing a new Standard for the provision of financial advice by its members.<\/p>\n
Under the new standard, APES 230 Financial Planning Services<\/em>, accountants will be banned from accepting all forms of conflicted remuneration, including commissions for life insurance advice.<\/p>\n According to the draft Explanatory Memorandum issued with the Standard, APES 230 <\/em>has been developed as a result of the Future of Financial Advice (FoFA) reforms, and covers issues such as fees, disclosure, and acting in the best interests of the client.\u00a0 The document states that while life insurance was excluded from the ban on conflicted remuneration within the FoFA reforms, the APES Board ‘…were of the view that Financial Planning Services should be treated as an integrated professional advice discipline’ and therefore ‘..APESB determined that insurance, risk and mortgage broking services provided by Members must remain within the scope of the Standard’.<\/p>\n Specifically, the proposed\u00a0Standard sets out that:<\/p>\n Members are prohibited from receiving third party payments and\/or other benefits including Soft Dollar Benefits in relation to a Financial Planning Service from parties other than the Client to whom the service is provided, as such receipts create threats of self-interest and\/or advocacy to the fundamental ethical principles for which no safeguards exist which can reduce the threats to an Acceptable Level. \u00a0<\/em><\/p>\n In addition, the ban on conflicted remuneration includes asset or percentage based fees, and will apply retrospectively (after a two-year transition period).<\/p>\n The changes to APES 230<\/em> were tabled for discussion at an APES Board Meeting on 17 May, and if approved, will come into effect from 1 July 2013.\u00a0 It will apply to all members of the Institute of Chartered Accountants (ICAA), Chartered Practicing Accountants (CPA) and the Institute of Public Accountants (IPA).<\/p>\n IPA Executive General Manager, Representation & Innovation, Vicki Stylianou<\/strong>, said she believed APES 230<\/em> had been a “bit of a sleeper”, with the industry’s attention focused primarily on FoFA.<\/p>\n “We’ve been saying from the beginning that APES 230<\/em> needs to be closely aligned with FoFA,” Ms Stylianou said.\u00a0 “It’s going to be a higher standard anyway but it should be aligned.”<\/p>\n However, she said the IPA was concerned about the practical implementation of a ban of life insurance commissions.<\/p>\n “It’s been one of the main points of contention. It’s going to be really difficult to ban commissions on risk products so it will be interesting to see how it works out in practice.<\/p>\n “We’ll have to have a good look, digest, and have more discussions.\u00a0 FoFA is the main game, and we need to make sure we’re in alignment.” \u00a0<\/p>\n In November 2011, the IPA announced a partnership with MLC and AXA to deliver a financial planning licensing and referral package to its members.\u00a0 Ms Stylianou said that it was too early to determine what impact the Standard may have on referral arrangements but added that it was something the IPA would be keeping a close eye on.<\/p>\n “I think sometimes you can create policy and standards but if you don’t do them with an eye to the practical application, then you’ll end up having to review them again down the track.”<\/p>\n","protected":false},"excerpt":{"rendered":" Insurance commissions will be banned as a form of remuneration for accountants providing financial advice to clients, under a new ethical standards policy currently being drafted.<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,8,270],"tags":[],"class_list":{"0":"post-15709","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-associations","7":"category-compliance-regulation","8":"category-remuneration"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/15709","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=15709"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/15709\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=15709"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=15709"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=15709"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}… the ban on conflicted remuneration\u00a0… will apply retrospectively<\/h6>\n
It’s going to be really difficult to ban commissions on risk products…<\/h6>\n