Accountants who refer their clients to financial advisers receiving commissions are not acting in their clients’ best interests and are compromising the accounting code of ethics, an adviser has argued.
In a recent blog post, Justin Brand of Brand Financial said the Accounting Professional and Ethical Standards Board (APESB) states in its code of ethics that commissions create a "threat to objectivity and professional competence”.
Therefore, Mr Brand believes accountants cannot have a client’s best interests in mind when referring them to an adviser whose remuneration is tied to the sale of financial products.
“Given that accountants recognise that commissions ‘create a self-interest threat’ to the client, then knowingly putting a client in a conflicted position cannot be consistent with the accountant’s professional principles, their fiduciary duty or a client’s best interests,” Mr Brand said.
“If you are an accountant, why compromise your clients’ quality of advice and your professional reputation by referring to financial advisers … who can’t meet the same level of professionalism as your practice?
“If you’re an accountant aiming to act in accordance with your fiduciary duty, how do you justify referring your clients to someone whose advice is fundamentally compromised by self-interest?”
Mr Brand said historically accountants had few options, however, the emergence of a vibrant, independent financial advice industry gives them an alternative that better suits their principles.
“Accountants have obligations. More importantly, they now have options,” he said.
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