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
- 21 Sep 2017Advisers not fully aware of LIF impacts: ZurichBy Staff Reporter
- 21 Sep 2017Red tape forces SMEs to cut staffBy Adam Zuchetti and Aleks Vickovich
- 21 Sep 2017Bitcoin 'dangerous and speculative', says MagellanBy Tim Stewart
- 20 Sep 2017ANZ calls for adviser transparencyBy Killian Plastow
- 20 Sep 2017Labor slams mooted ASIC appointmentBy Aleks Vickovich
- 20 Sep 2017‘Modest start’ for Australian super fundsBy Jessica Yun
- view all