CPA Australia may struggle to become approved as a code monitoring body under the FASEA regime due to its ownership of the CPA Australia Advice AFSL.
Under the government’s incoming mandatory education and standards policy, financial advisers will need to be recognised by an approved monitoring body, which will assess compliance with an approved code of ethics.
Guidance is still under development, but it’s clear that monitoring bodies cannot be a licensee or an affiliate of a licensee. CPA Advice, a licensee, is a subsidiary of CPA Australia.
If CPA Australia is not recognised as a monitoring body, its accountant members who also provide financial advice will need to join another organisation that is approved as a code monitoring body to be compliant.
As guidance from FASEA continues to roll out, licensing and compliance experts are increasingly questioning how CPA Australia will remedy this potential conflict. CPA Australia is aware of its barriers to recognition and has been in negotiations for several months.
“We understand that associates of an AFS licensee cannot act as a monitoring body to enforce a code,” a spokesperson for CPA Australia told ifa sister publication Accountants Daily.
“It is something that we have been, and will continue to be, in discussion about with relevant stakeholders. In the meantime, the sector is looking forward to the release by ASIC of guidance on the framework for the monitoring bodies.”
Despite the friction, CPA Australia stressed it is broadly supportive of the new measures.
CPA Advice was central to the problems the association had with securing a professional standards scheme last year, which provides liability coverage for accountants in public practice.
The Professional Standards Council (PSC) authorises the schemes and was, at the time, concerned by a potential conflict of interest the licensing arm posed. The corporate governance scandal that engulfed the organisation for much of 2017 also concerned the PSC.
As it stands, there is little chance CPA Advice will reach its projected 1,360 authorised representatives by 2019. As of June last year, it had onboarded 27 representatives, well short of its targeted 250 by year end.
The dealer group has been troubled since its launch in 2015, reporting a total combined trading loss of $7.4 million in November 2017.
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