Under the government’s incoming mandatory education and standards policy, financial advisers will need to be recognised by an approved monitoring body, which will assess compliance with an approved code of ethics.
Guidance is still under development, but it’s clear that monitoring bodies cannot be a licensee or an affiliate of a licensee. CPA Advice, a licensee, is a subsidiary of CPA Australia.
If CPA Australia is not recognised as a monitoring body, its accountant members who also provide financial advice will need to join another organisation that is approved as a code monitoring body to be compliant.
As guidance from FASEA continues to roll out, licensing and compliance experts are increasingly questioning how CPA Australia will remedy this potential conflict. CPA Australia is aware of its barriers to recognition and has been in negotiations for several months.
“We understand that associates of an AFS licensee cannot act as a monitoring body to enforce a code,” a spokesperson for CPA Australia told ifa sister publication Accountants Daily.
“It is something that we have been, and will continue to be, in discussion about with relevant stakeholders. In the meantime, the sector is looking forward to the release by ASIC of guidance on the framework for the monitoring bodies.”
Despite the friction, CPA Australia stressed it is broadly supportive of the new measures.
CPA Advice was central to the problems the association had with securing a professional standards scheme last year, which provides liability coverage for accountants in public practice.
The Professional Standards Council (PSC) authorises the schemes and was, at the time, concerned by a potential conflict of interest the licensing arm posed. The corporate governance scandal that engulfed the organisation for much of 2017 also concerned the PSC.
As it stands, there is little chance CPA Advice will reach its projected 1,360 authorised representatives by 2019. As of June last year, it had onboarded 27 representatives, well short of its targeted 250 by year end.
The dealer group has been troubled since its launch in 2015, reporting a total combined trading loss of $7.4 million in November 2017.
How exactly did the Professional Standards Council (PSC) authorize the professional designation of the AFA and the FPA when both bodies are conflicted by accepting “donations ” from financial services product manufacturers. And then there’s the issue of compulsory memberships from those same vertically integrated manufacturers.
Sounds like compulsory Union membership, being forced to join a code monitoring body. Time to start up a new association me thinks.
Can you imagine how much cash these failed dealer group managers are ripping out of the CPA Membership…
Does anyone know how accountants with accounting degrees not specialising in financial planning can continue under the FASEA education requirements? They have done a course with an exam but it is like 2 days and hardly a uni equivalent degree. I am talking about all those with limited licenses that just became accredited due to their exemption going.
They won’t be allowed to continue to provide advice without meeting the same requirements as us.
Many accountants practicing as financial planners do not have a financial planning degree.
a lot of them don’t even have an accounting degree, many were grandfathered without even a degree in accounting
look at the CPA governance saga, they are a disaster and are imploding
Hey IFA…this is an interesting point. I note CPA Australia issued a notice expressing concerns about FASEA (08/03/2018). Kudos to the CPA for this and perhaps the FPA should look towards them for inspiration as opposed to a “let’s wait and see” approach followed by “it’s too late & live with it”. The majority of accountants, providing SMSF advice I know have either a combination of no formal qualifications or a degree in Commerce/Business with only a short course completed recently to meet limited AFSL requirements. It would interesting to hear their thoughts & reactions as certainly CPA Australia has greater pulling power.
Accountants know they can provide share and property investment advice without a licence because ASIC will turn a blind eye. Accountants know they can recommend inappropriate SMSFs because ASIC will turn a blind eye. Accountants don’t need to bother about compliance with financial advice licensing laws or an approved code of ethics. Legal enforcement of these things only applies to financial planners.
Accountants and FASEA will ignore each other in the same way accountants and ASIC do.
A very true set of comments based on what has occurred.
What happens going forward? Again I agree ASIC has a poor track record and has never once busted an Accountant for giving AFSL strategic advice with an AFSL, zero compliance, etc.
Wonder if ASIC ever will enforce the new rules ?
NO. once the degree requirements are implemented most accountants won’t qualify as they don’t hold a degree in financial planning