Late last week, CPA Australia announced it was to establish a new wholly-owned subsidiary to provide independent financial advice to Australian consumers.
CPA chief executive Alex Malley says the new company, CPA Australia Advice, will be consistent with Section 923A of the Corporations Act 2001, which allows the use of terms like ‘independent’, ‘impartial’ and ‘unbiased’.
“No commissions, no hidden incentives, no asset-based fees – just pure and transparent fee-for- service,” he said.
“The company we are announcing today will set a new benchmark for professional and ethical conduct in making independent financial advice available to all Australian consumers.”
However, Sarah Penn, owner of Mayflower Consulting and former division director for SMSFs at Macquarie, told SMSF Adviser that a key issue is now whether this will be a long-term, successful part of CPA or whether it is “more of a tactical response to a once-off situation”, this being the end of the accountants’ exemption.
Ms Penn believes the CPA move is in response to the expiration of the accountants’ exemption, “because that’s the only place accountants do any advice at the moment”.
However, Mr Malley told SMSF Adviser that while the phase-out of the accountants’ exemption has relevance, CPA sees the move as one that is “in the public interest”.
“We’ve seen, we all have seen, some really awful stories, and awful principles being espoused,” Mr Malley said.
“We just feel that we need to reclaim the territory that was lost, I think, by the profession over time and bring back the core principles of fee for service and nothing else,” Mr Malley said.
The move looks set to be a popular choice with CPA members – Mr Malley said the organisation received 100 expressions of interest shortly after the initial announcement.
Meanwhile, The SMSF Academy’s managing director, Aaron Dunn, told SMSF Adviser he believes the move will “accelerate” the number of accountants moving into the licensing environment before the accountants’ exemption expires.
“[CPA’s] value proposition is front and centre of where the members are ,” Mr Dunn said.
“That level of independence and the use of the word ‘independence’ makes it clear CPA has been listening to the members and finding what is important to them,” he added.
However, some SMSF specialists, like Quantum Financial principal Tim Mackay, are not entirely supportive of CPA’s move.
“As an Institute member, if the Institute set up a financial advice business to compete with my practice I’d be absolutely livid. The last thing a professional expects or wants is for their own professional body who regulates your conduct to start competing with you,” he told SMSF Adviser.
“If CPA Australia and the Institute had supported the original higher standards of APES 230 in 2014, we would already have all professional accountants providing conflict-free advice. Instead, last year CPA Australia sided with the same institutions it now criticises to successfully water down the professional advice standards for accountants.”
Is CPA Australia really competing with their members? I thought they were setting up a licensee that would provide support to accountants who wanted to provide advice.
Agree with Tim’s view. Why the sudden change of heart? This seems to be last minnute reaction to a lack of preparation. There will be a lot of CPA’s who charge asset based fees and accept commissions. Will they be able to call themselves CPAs in the future now that Malley has gone for the high moral ground. The APES 230 was the right forum for this to be discussed.