The rising cost of compliance, multiple licences and the burden of increasing regulation are forcing accountants to cease providing financial advice, according to a report from CPA.
The report – The Impact of Complex Regulatory Frameworks – shows that 34.6 per cent of accountants who offer financial planning advice are considering cutting down on the number of services they offer, while 12.5 per cent are considering ceasing operation altogether due to the regulatory burdens imposed on the industry.
“Australians’ demand for financial planning services is strong but the number of financial advisers available to meet demand is declining due to pressure on accountants from excessive regulation,” said Keddie Waller, head of public practice at CPA Australia.
In order to provide advice on financial products, accountants must be authorised under an Australian Financial Services (AFS) Licence, but can potentially require up to four more licences in order to give advice on products with tax consequences or a client’s debt position and loan arrangements.
The report estimates the total costs of all these licences as $112,414 a year and notes that 61 per cent of accounting firms said they spent more time on compliance than they did one year ago.
There are also fewer new accountants entering the industry, leading to an ‘advice gap’.
“As accountants depart the industry, they are not being replaced by new entrants at the same rate, and it leaves less advisers with experience to mentor new entrants requiring supervised experience as part of their qualifications,” said Ms Waller.
The report put forward a number of recommendations for reducing the regulatory burden, including redefining product advice so that an accountant can provide general strategic planning advice and consolidating continuing professional development requirements to eliminate overlapping training requirements.According to the report, which surveyed 611 consumers, accountants are trusted and preferred for financial advice if they have the necessary licences or registrations.
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