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.
You would get to know about the regulation for forcing accountant out of advice. I enjoyed reading this article. It makes the work straight and easy for us. I like the way they have researched and presented it in front of us.
Hey Lachlan! Your knowledge about Regulation Forcing Accountants Out of Advice is very helpful for us. It was a wonderful experience to read your blog. Keep going.
[b]https://www.stuartsnowaccounting.co.nz/[/b][b][/b]
Um……everyone is leaving financial advice – not just these SMSF floggers .
Stick to tax returns
Interesting , why isn’t the FPA saying that the cost of advice is getting too dear and will only increase with more compliance etc ? That’s why I haven’t renewed . By the way FPA , how many have not renewed this year ?
If the public, the accounting professional bodies and regulators think for one minute that financial planning advice as denoted in the corporations law is only being provided by persons fully accredited to do so they live in La La Land. If I was to ring a half a dozen accounting firms, be they sole practitioners or partnerships in almost any larger regional town I would get it without so much as a hint of an FSG, fact finder or Best Interest Duty being undertaken. The most commonly used reply by the accountants is that “it is all a load of BS and that why should they need to get a piece of paper to tell clients what they have been doing for years anyway, it is just a revenue grab, and we know more then advisers anyway as they just do a weekend course and of they go”. For the regulators and otherwise to think that this is going to change is wrong, many accountants have now decided that the way around this is to simply set up an arrangement in which they refer to some group and that group will give them a referral fee, a sling or cut off commission as they as the referring party do not need to disclose this and the “adviser” can put in the disclosure section of the SOAS page 43 of 80 and nobody would ever question it. So what has been achieved, nothing.
They should have the same rules and greater regulatory scrutiny. The number of inappropriate SMSF’s I have seen over the years is a disgrace and these poor clients are left in a much worse of position under the “trusted accountants” advice….boils my blood and yet they look down at us. To add to a previous comment, it’s to replace revenue streams not look after the client. They need as detailed review as we have had to go through to really weed out the bad from the good.
No sympathy. These guys advising on complex life risk products such as IP are like shark-infested custard – an attractive shade of yellow with unseen dangers lurking.I do not give accounting and legal advice and these guys should be better “professionals”and stop putting business revenue before clients. Note to Treasury – do not re-instate the accountants exemption
Haha…doing this for 20 years has taught me a few things:
Education doesn’t make the professional
Good advisers were doing it right before FOFA & RC
Accountants should stick to tax and accounting
Accounting professional bodies have little if any skill or knowledge to advise on financial advice regulation
Exemptions create loopholes and ultimately the consumer suffers the consequences
You can’t be all things to all people and do it all well
Regulations have not become more burdensome or costly but simply evolved to define what is expected
Don’t like it? Stop whinging and get out of the way so the people who care about their clients and our profession can get on with it.
Talk about being a bit Rich.
[i]”Regulations have not become more burdensome or costly”[/i][i][/i]
Ba huh huh huh huh ……………….you are so funny, what an absolute loads of rubbish.
[b]Even the crazy regulators are admitting the REGS have become more burdensome or costly. [/b][b][/b]
Its not just accountants that are leaving the financial services industry as a result of massively onerous compliance obligations. Risk Advisers are too. Well done ASIC…hope you’re happy.
will anyone be left to provide advice?!
Welcome to the world of financial planning
Public accountants are a rule unto themselves…they’ll just go underground and pretty much do whatever they want anyway so I don’t really care what accountants do. So long as a their clients pay the “benchmark” average rate of tax in line with their occupation there is never ever any oversight whatsoever. I’m actually very jealous of there business model. People are forced to meet with their accountant, none of this “I’m on holidays Mr Planner and so hand back fees” and every year the accountant just needs to drop a hint about “taking control” ..or .”how about that poor performance, everyone is opening up a SMSF ” to select candidates and by year 3 of the relationship or market down turn, (whatever comes first) the client is coming to them saying…”I want to open up one of those SMSF”. Within a five year period you’ve got 100 clients paying $3,000 in admin fees, the clients are invested in term deposits and four bank shares, and you’re paying one person to do the admin. No brainer really for any mid size firm.
Given what some (long-standing) accountants are up to, forcing equivalent standards to FP should’ve been done a long time ago.
There is no question that ASIC’s accountants’ exemption was abused, resulting in actual bad outcomes for end clients – even to this day.
Welcome to our world accountants. Yep its become too expensive to provide advice and there won’t be many left doing it in the future.
Here we go again. Accountants trying to get out of the rules and regulations governing the provision of financial advice. Yes there is a lot that needs to be done to give quality advice. Either do it properly or don’t give financial advice.
It’s far harder to give financial advice than medical advice
No doubt Financial Advice is massively overly regulated and the Govt just wants to add more and more and more BS Red Tape regulation.
But as for Accountants who want to go back to providing bucket loads if illegal AFSL advice with zero AFSL compliance under the guise of the old accountants exemption that was so badly abused it was a joke.
Yeh NA !!
It is good to see that Accountants are now actually aware of the time, costs and wastes of consumer BS regulatory protections involved in providing legal AFSL compliant financial advice.
The creation of many many SMSF’s by Accountants over the last 10 years has been a strategy to replace lost revenue rather than necessarily being in their clients best interest.
In many cases, these would be fine, but for a significant percentage, the lack of client understanding around these structures would indicate they may well have been better off in a low fee paying superannuation master trust arrangement for the purpose of achieving the accumulated retirement monies.
Where have the accountants been the last few years?? The worlds moved on, its like they think we are back in pre FOFA days.. If you don’t meet FASEA standards they can’t advise simple!
i wonder if the regulator is paying attention, if anyone were allied enough to move into financial planning it was the accounting profession, now they are citing rising cost burdens from a compliance perspective, and these businesses have other revenue streams to fall back on. i guess the best option is to buy an accounting practice now
Currently Accountants can set up an SMSF under ‘no advice’ if a client requests them to do so. In my experience rarely is that purely the case and there is coaching behind the scenes to make it easy to action. Whereas on the other hand for an Adviser to advise on setting up an SMSF there is a massive amount of work and compliance to get through
Compliance burden is pushing out all sorts of advisers not just part time accountant. There shouldn’t be new exemptions simply a sensible reduction in red tape applying to all licensed advisers.
Yeah, stupid regulations forced us all out of providing medical advice and masquerading as doctors many years ago too….what a stupid assessment by the CPAs
Oh cant get the exemption so throw the toys out of the bath. Don’t want to do the study or operate under a licence as its just all too hard. Good see you later, don’t let the door hit you on the way out.
To be honest, they were never really in it if they are doing it part time!
Same rules should apply to everyone who wants to provide Financial Advice. Accountants mentioned above are just trying to get another exemption.