Pitcher Partners managing partner for Newcastle Michael Minter said the removal of the accountants’ exemption happened at a time when demand for advice was increasing due to the super reforms, with clients requiring advice around pensions, contributions and tax strategies.
Mr Minter said he was concerned that fewer and fewer accountants are in a position to actually advice clients now because of the need to be licensed and all of the hoops and adviser needs to jump through in terms of statements of advice and other documentation.
“It’s adding to cost, complexity, delays and, in some cases, I’m seeing clients who just aren’t getting the advice that they need,” he said.
In addition to the requirements with licensing, accountants who want to provide advice will soon also have to meet the new education standards set by the Financial Adviser Standards and Ethics Authority (FASEA).
“I know that the Institute of Chartered Accountants are starting to make a little bit of noise around this issue of education requirements that are coming up. There should be some recognition of the professional standing of a chartered accountant and the obligations they have to have from an educational perspective,” he said.
“We need to rethink whether the current licensing regime really is in everyone’s best interests. I have concerns that it’s not. I’m not sure that it’s actually weeding out the people that do the wrong thing. It’s weeding out some good advisers because it’s all just too hard and there’s too many hurdles to get licensed and do the educational requirements.”
Those who do offer unscrupulous advice, he said, are unlikely to worry about “jumping through the hoops for licensing and instead play on the edge” by labelling their services as execution only.
“You hear stories of people playing in that sort of space. It’s not a level playing field when you’re trying to do the right thing and follow all the requirements. So that to me is a big issue,” said Mr Minter.
Given the recent findings of the royal commission, it will be difficult to convince the general public to cut some of the red tape around licensing, he warned.
“We’ve just come out of a royal commission, so I don’t think the general public would support any conversation about licensing because there’s a perception that everyone out there is doing the wrong thing and we need more regulation to protect consumers from dodgy advisers,” he said.
“All we’re doing though is adding red tape, complexity and cost. There has to be a happy medium in there somewhere to deal with that, but I suspect nothing is going to happen about it in the current environment.”
There is probably a happy medium here.
I think the real issue is around pensions and whether they are a product or a tax vehicle
If they could be exempted back out of the system and referred to as a tax vehicle it would solve a lot of ongoing problems
Setting up an SMSF is a one off event and could probaly stay in the financial planning system
However the pension area and the assocaied ASIC laws have made it all very complicated
If this area can be exempted back out of the law I think we would have a compromise solution
Accountants do not want to be planners as it does not especially suit their skills or their mindset.
Howver they are being put into the planner straifgt jacket to comply and it does not suit them. It makes
them very little money unless they resolve to go to it with a lot of resources – whixh most do not want to do.
They then cannot fully service the small family businees which in turn expects this service and does not
understand this ASIC invented problem
Soon the little people will only be able to get advice from the big businesses which will lead to the client either paying more or not bothering to get advice. And if the big businesses do wrong by the client, well they have enough money to pay for their lawyers don’t they?
I don’t think you can lump the accountant, the financial planner and major entities such as AMP and the banks in the same boat!!
Started the journey in 2010 by completing Diploma in Financial Services (Financial Planning) and when I applied for the Limited licence was told to complete two more units in 2017 and finally got Limited licence in 2017 and only to be told that new education requirements of FASEA will make my existing qualifications outdated. From 2010 to 2017 the amount of time and money I spent for this license got me 1 client. Is it worth to continue spending time and money when you do not know whether any new changes will be made in the near future. The advice that is provided to clients is already covered by the other education and experience I hold in allied fields like SMSF auditor, tax agent and CPA Financial Planning. It is too much for me and does not make any sense.
The Elephant in the room, thank you pointing this out, especially being an Accountant, not enough focus on this, even planners have had enough