Speaking to ifa, a CPA Australia spokesperson elaborated on the accounting body’s announcement that it will seek an Australian Credit Licence in addition to its much-hyped application for an AFSL.
“The decision to apply for an Australian Credit Licence is to enable the provision of holistic advice when discussing a client’s financial affairs, which will often include the review of personal debt when assessing cash flow,” the spokesperson said.
“Members who are authorised to provide credit advice will be able to provide mortgage broking services. We envisage such services will be one element of the credit and overall advice offer.”
Asked how mortgage broking services will fit within its pledge to provide “independent financial advice” services as defined in the Corporations Act, the spokesperson said these members will not be exempt from the requirement to refrain from taking commissions.
“All advice and services provided under the Australian Credit Licence will be on a fee-for-service basis,” they said.
“If there is a commission payable when a loan is placed, this commission will be rebated to the client – in full.”
Members who are authorised to provide credit advice services may have an edge over market competitors due to their also being qualified as accountants and financial planners, the spokesperson said.
“There are already professional accountants who are licensed to provide valuable advice in regards to mortgage broking and consumer credit services,” the spokesperson said.
“The value of such services is the advice that they provide is underpinned by their broad finance, structuring and tax expertise.”
[quote name=”Warren”]
Hey Bento – I’d like to see an accountant actually come out from under their desk and ask one of their clients about the insurance they hold. Most of the accountants I know are terrified to ask a question that might result in a no. Even when your compliance guidelines state you’re meant too now?
How many of your clients have you asked about the importance of Income Protection?
You have no idea how hard what we do is – or the hours many of us work for our clients.
[/quote]
Gday Warren, I ask all my clients about their insurance as I’m a financial planner. So I might have some idea?! I also refer to good accountants who work just as hard as any other professional.
I met a prospective client this morning. High income earner, very switched on and keen for advice. She will be a perfect client for me. Her accountant recently became an adviser and he has been pushing her to come on board with him. He has no idea about financial planning, and she saw straight through him. The trust, which was built up over 25 years, has now been lost, and she is seeking advice elsewhere. This move by the CPA could play out very well for quality financial planners. Good luck everyone!
It’s admirable that advisers will charge a fee for service only but has the CPA considered this.
If a commission is paid to an adviser and rebated in full to the client and then in a short time the loan is repaid then the lender will often claim back the commission from the adviser. The adviser will then have to ask his client to repay the rebate. I don’t like the chances of this happening especially if the rebate is a very large amount.
Insurance commissions will, I assume, be rebated and if the 3 year responsibility period is introduced then rebating commissions would be dangerous. It would be better to ensure both loans and insurance policies are written with no commission if possible but I have a feeling that the clients will mostly reject a fee for service in many cases. Any comments???
[quote name=”Paul”]They will use commission rebates as a loss leader to shovel clients into overpriced, inhouse administered SMSFs that are totally inappropriate for the client’s circumstances.
In a post FOFA world, accountants recommending inhouse SMSFs is the greatest area of conflicted remuneration and inappropriate advice in financial services. And the ASIC Chairman appears to be encouraging them. This is where a parliamentary enquiry is really needed.[/quote]
Here here Paul!!
Are you and astonished by the LACK OF FOCUS on this conflict of interest as I am???
[quote name=”Bento”]Not all CPAs will have to use the license or provide additional services I’m sure. Some will. Some CPAs are great advisers already and this will formalise it adding another source of income for their good work. It will make the advice market more competitive and I think it’s bloody great!
To all the nay-sayers…suck it up folks. Get used to more fee for service competition cutting into your easy margins.[/quote]
Hey Bento – I’d like to see an accountant actually come out from under their desk and ask one of their clients about the insurance they hold. Most of the accountants I know are terrified to ask a question that might result in a no. Even when your compliance guidelines state you’re meant too now?
How many of your clients have you asked about the importance of Income Protection?
You have no idea how hard what we do is – or the hours many of us work for our clients.
I really look forward to hearing how accountants manage their clients insurance claims processes in the future, most of which will last 12-18 months, without sliding an invoice across the desk for the time that’s required managing it. You’ll soon see we earn every cent we’re paid…
@ Bento,
Yeah it’s a big gravy train, we just sit back in our glass towers raking in the cream
Get a clue would you.
Not all CPAs will have to use the license or provide additional services I’m sure. Some will. Some CPAs are great advisers already and this will formalise it adding another source of income for their good work. It will make the advice market more competitive and I think it’s bloody great!
To all the nay-sayers…suck it up folks. Get used to more fee for service competition cutting into your easy margins.
[quote name=”Lisa P”]Wouldn’t it be just a tad amusing if ASIC declined CP’s application for AFSL, afterall, what does a professional body know about running a license? If you talk to an accountant about their clients the fact that they resent paying their bill for accounting work is the first thing that is uttered. Why then would their clients fall over themselves to pay fee for service for these other things? I dont’think the CPA’s have thought about this fundamental – the vast majority of accountants wiull not talk to their clients about broader range of services. They are too busy with compliance deadlines to consider anything else. Apart from the fact that accountants hate selling. I’m predicting low to moderate long term success for this venture.[/quote]
Nicely Put, Broker’s don’t have anything to fear. If anything it will be at the expense of the big 4 retail channel. Instead, of Accountants passing leads to the mobile lenders or to the bank directly they will write the deal themselves.
I see a long prosperous future for us. We are only at 51% market share, we have another 48% to claw back.
Go on get, nothing to see here, get back to work.
Well done CPAs for showing everyone how it should be done. It’s exactly as many of us have been doing for years but this time it’s formalised across a whole professional group. It will eventually spell the demise of advisers who take commissions – and advisers have no one but themselves to blame if/when that occurs. Fee for service, independent advice, not related to product and invoiced either annually or ad hoc is the only acceptable way to provide a truly professional service. It doesn’t mean that their service will be better but it does mean it will at least be independent of third party product providers. The only fly in the ointment is that product with commissions will look like they are more attractive (because of the cash rebates) so we need commissions to be outlawed sooner rather than later.
Advisers who don’t like it or who believe they can provide better advice (and I think there are many who could)should join the movement and show everyone how to do it better as fee for service advisers.
Really – all this extra work and they will rebate all commissions to the client?
The clients should watch the fees that they are going to be charged for doing their tax returns – i bet that these fees will increase dramatically
Accountants charge by the minute and suddenly all the extra work they do will be rebated??
What happens when the commission is clawed back because the customer has left the loan early?
Wouldn’t it be just a tad amusing if ASIC declined CP’s application for AFSL, afterall, what does a professional body know about running a license? If you talk to an accountant about their clients the fact that they resent paying their bill for accounting work is the first thing that is uttered. Why then would their clients fall over themselves to pay fee for service for these other things? I dont’think the CPA’s have thought about this fundamental – the vast majority of accountants wiull not talk to their clients about broader range of services. They are too busy with compliance deadlines to consider anything else. Apart from the fact that accountants hate selling. I’m predicting low to moderate long term success for this venture.
What about Risk?
This refers to Loan comms..
They will use commission rebates as a loss leader to shovel clients into overpriced, inhouse administered SMSFs that are totally inappropriate for the client’s circumstances.
In a post FOFA world, accountants recommending inhouse SMSFs is the greatest area of conflicted remuneration and inappropriate advice in financial services. And the ASIC Chairman appears to be encouraging them. This is where a parliamentary enquiry is really needed.