IPA urges government to fix ‘FOFA’s failures’
With the government evaluating the current regulatory model for accountants and advisers in its review of the TPB, the Institute of Public Accountants has urged it to address some of the system failures arising from the FOFA reforms.
A discussion paper for the review of the Tax Practitioners Board has floated a return to the accountants’ exemption by allowing accountants to provide incidental financial advice as well as allowing financial advisers to provide incidental tax advice while not having to be registered with the TPB.
“This option would bring back the accountants’ exemption and allow accountants to provide basic SMSF advice and services without having to operate in the AFSL environment,” Treasury’s discussion paper said.
Speaking with Accountants Daily, the Institute of Public Accountants general manager of technical policy Tony Greco said the fact that the option has been proposed was promising but said it should not be viewed as a like for like reinstatement of the previous concession.
“We don’t want to call it the accountants’ exemption because that was very restrictive,” Mr Greco said.
“We are pleased that there is a discussion paper that entertains that concept, but we need to go back and rethink what level of financial advice a trusted accountant can provide, and under the current regulatory model, there is an opportunity to revisit it.
“FOFA’s policy intent has not been achieved in that affordable, accessible advice for the man in the street hasn’t happened, so we’ve got system failure.
“That needs to be addressed at the core, and the trusted adviser being the accountant is still there but not been able to participate in any conversation with the client, so that’s why that option acknowledges FOFA’s failures and entertains some provision of advice.”
The IPA’s executive general manager, Vicki Stylianou, believes the discussion paper opens up a broader discussion on who should be the appropriate regulator.
“It revisits a lot of the same issues that we talked about where we designed FOFA, including who is the appropriate regulator, you’ve got the TPB, ASIC, a hybrid or a whole new body, and now FASEA,” Ms Stylianou said.
The preliminary view of the discussion paper notes that for any new model or process to deal with tax financial agents would require legislative change and arrangements between the TPB, ASIC and FASEA.
Ms Stylianou said the review would need to carefully consider if the TPB should be regulating this space.
“What responsibilities you give to the TPB will depend very much on its structure. If the TPB is given a broader remit, then obviously structure and resourcing has to change,” she said.
“It is a threshold issue that we are really looking at, which is why we are talking now about the fact that if you want them to regulate accountants in the financial services space, then it goes to what is the appropriate structure of the TPB, and even more broadly, is the TPB the appropriate body to even be regulating this space.
“You can have the TPB regulating, but they are not resourced for it, they don’t have the expertise for it, so to get them to regulate something that they never regulated I think is a big ask, whereas ASIC is already doing it and has been doing it for a long time.”