The FPA has warned against an initiative that would see accountants who provide financial advice operating on a fee-for-service only model, saying there is a major difference between advice and accounting businesses and the move would be detrimental to consumers.
Last week, the Accounting Professional & Ethical Standards Board (APESB) closed submissions to its consultation paper on the post implementation of APES 230 Financial Planning Services – which were a set of standards introduced in 2013 for accountants who provide financial advice.
In the post-implementation paper, APESB raised the idea of transitioning its accountant members who provide financial advice to a fee-for-service only remuneration model as it is “a way of enhancing the independence and quality of financial planning advice”.
However, In its submission to APESB last week, the FPA said the industry is not ready for such a drastic change to remuneration and such a model would put consumers at a disadvantage.
“We would encourage the APESB to focus on access to advice for consumers. Limiting remuneration to a fee-for-service basis could cut off remuneration options that make advice accessible and affordable for consumers.”
There is also a strong need to understand the difference between accounting businesses and financial planning businesses, the FPA said.
“Accountants’ services are more transactional in nature and are limited to tax matters. Financial planning businesses can manage millions of dollars for their clients – the larger the client portfolio, the more time is needed to appropriately service the client, and the higher the risk,” the FPA said.
Should the APESB consider the initiative further, a separate and detailed consultation should be undertaken to identify the implications for the profession and consumers, and the detail of how a fee-for-service only policy would work in practice across the breadth of the profession, the FPA said.
Several firms have been impacted by the corporate regulator’s action.
Super funds must now have a retirement income strategy in place.
Vanguard has called for a complete overhaul of the advice industry.
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