CPA Australia should “reconsider” its independent financial advice strategy in light of lacklustre performance, the association’s independent reviewers have concluded.
In its preliminary report into governance, remuneration and other issues at CPA Australia, the independent panel led by former auditor-general and CPA member Ian McPhee found a number of concerns with the accounting association’s push into financial advice licensing.
“The business case for establishing CPA Advice articulates a strategic rationale … there was significant intent from CPA Australia and the CPA board to provide a service that was in the best interest of CPA Australia, CPA members and the public,” the report, which was released today, stated.
“However, the performance of CPA Advice has suffered from a number of issues that have impacted uptake by members. CPA Advice has found it difficult to recruit authorised representatives, despite an initial high number of expressions of interest.”
In addition to a low take-up rate, the report confirmed “sizable losses”, with revenue falling well behind projections in the business case made by the management led by ousted chief executive Alex Malley.
The report also found that executive team remuneration at the association, including in the advice arm, was well above the “benchmark” for member-based associations and did not follow appropriate procedures.
The independent panel found a number of key reasons for the poor performance of the advice arm.
First, the report found that CPA Australia struggled to provide a “clear value proposition” to members in terms of becoming licensed by CPA Australia Advice.
Second, it suggested that “negative press” coverage of the association and its leadership team may have adversely impacted the recruitment drive.
Third, it acknowledged there were serious member concerns around a potential “conflict of interest” in the launch of the advice business and possible inability for the association to meet its requirements as a “professional occupation association”.
The preliminary report recommends that the association conduct a “comprehensive post-implementation review of CPA Advice” and “reconsider the strategy” in light of the poor performance so far.
It noted that changes to the pricing model for CPA Australia Advice have already been announced.
SUBSCRIBE TO THE IFA DAILY BULLETIN
24 Jan 2018FPA ‘never intended’ FPEC list for existing advisersBy Killian Plastow
24 Jan 2018ASIC investigation confirms in-house product biasBy Aleks Vickovich
24 Jan 2018CBA compensation payout hits $6.87m and risingBy Staff Reporter
23 Jan 2018Financial advice changing of guard ‘positive’By Staff Reporter
23 Jan 2018Royal commission, best interests duty and 2018 outlookBy Staff Reporter
23 Jan 2018Advisers challenged by geopolitical climate: reportBy Staff Reporter
- view all