Speaking in a recent panel discussion, Chartered Accountants Australia and New Zealand leader CA ANZ, financial advice, Bronny Speed explained that since the end of the accountants’ exemption back in 2016, the advice and accounting industries have been hit with a “number of tsunamis” on the regulatory front, which has made the provision of strategic or limited advice extremely difficult.
“Instead of just having the limited licensing regime to deal with, we then had the superannuation reforms, which were difficult to express in statements of advice under a limited licence, and then more recently we’ve had FASEA step up its action and the FASEA reforms come in on top,” said Ms Speed.
“There’s been new CPD rules, new education rules, Code of Ethics, a new single disciplinary body and the industry funding levy. All of those things have just made it impossible for those under a limited licence and that certainly hasn’t been lost by many of us who work in this space.”
Around two years ago, Ms Speed said that CA ANZ initiated a project to create a separate advice model that might work for everybody across advice and accounting.
“A lot of our members have made it clear that they don’t want to be able to give product advice or deal directly with equities for the super fund, or compare various retail and industry funds – they just want to be able to do their basic bread and butter,” she said.
Ms Speed said CA ANZ, along with other accounting bodies, took this model to senator Jane Hume when she was elected in May last year.
While Ms Hume has made it clear that the government will not be bringing back the accountants’ exemption, she asked the accounting bodies to develop a proposed model that would work across the whole advice industry, Ms Speed said.
“This was way before COVID hit, in fact she promised she would get us a seat at the table with the Prime Minister, so some of us went to Canberra in December last year, and then Simon Grant, who is our leader of advocacy and is right behind all of this work, went and saw the Treasurer in January, so it was gaining momentum back then. But then of course, we had the bushfires hit, and we had to hold off, and then of course, COVID hit,” she noted.
Despite some of the setbacks and government resources needing to be dedicated elsewhere, Ms Speed said five industry associations have continued to work together for the past 12 months.
“Throughout the COVID period, we’ve written letters to the National COVID-19 Coordination Commission to try and get reforms off the back of COVID, and we’ve also worked with the TPB and ASIC,” she said.
Ms Speed said under the framework, it was decided that contributions, pensions and establishment and windups could be pulled out of the licensed advice regime.
“If we could get those basics, we’d be happy, and that would be for everyone with a basic level of qualification,” she said.
“The industry has had several sessions with Senator Hume, and she’s pretty keen on the concept of single-issue advice or single topic advice. So, it’s gaining momentum, so I’m really hoping we’ll be able to do those basic things without a licence,” she said.
While CA ANZ had suggested that advice comparing different industry funds, retail funds and corporate funds should remain the domain of fully licensed advisers, pulling contributions, pensions and structural work out of the licensing regime would be ideal because it would pull many accountants out of the FASEA umbrella as well, said Ms Speed.
Isn’t the point here the provision of advice to more people?
This must mean increasing the number of advisors available.
And this should also mean a standardisation of the process for certain advice services.
The end result could be a relaxation in some of the red tape which all of us are so keen to experience.
Clearly the ramping up of qualifications has seen a mass exodus. Not all planners have the same desire to upskill. The same happened for accountants with the FOFA reforms. Explaining why there are now so few and the pool is shrinking.
All of us need to provide decent feedback to our governing bodies about a way forward.
Nothing about this has been fair for either side of the planning divide.
But we are collectively a smart group and there should be some decent suggestions being made, rather than uncomplimentary exchanges.
Well said, Lyn.
While all this sniping between the bitter and the self-righteous protectionists on both sides of the debate has provided hilarious reading over the years, it doesn’t actually achieve anything. In fact, it makes us all look like childish idiots.
The real underlying issue crippling both the accounting and planning industries is the exponential growth of red tape and stifling regulation, and this is what needs to be addressed.
Despite what the bureaucracy thinks, piling on additional regulation doesn’t fix anything. You can’t legislate away the right for people to make their own decisions and you can’t force them to take advice they don’t want. Making the whole process ridiculously complicated, and prohibitively expensive, just drives them away from advice practitioners altogether.
Government action in this space over the past few years has resulted in the exact opposite of what everyone wants – the provision of affordable advice to more people.
So will those Accountants who have spent thousands obtaining a Limited Licence be compensated?
While I am cognisant of the issues that ‘anonymous’ and ‘IFA man’ have raised – essentially around compliance and FASEA qualifications, there are 2 things that come to mind:
1/ around 80% of Australians are under-advised or not advised, and
2/ accountants are the natural place where people go to talk about their finances.
They often think of Planners like lawyers – expensive and alouf.
So, 1/ isn’t it better that the 80% go to someone they know and trust who can help them (accountant) , and 2/ the accountant is well qualified to answer the non-product questions. Better that they go to an accountant than no-one!
More than likely, they’ll get a reference to go to a Planner!
They can go to an accountant, who follows the law. Giving advice on contributions, pensions and SMSF set up is financial advice so accountants should be governed by the same laws as financial planners. You can’t say that setting up a SMSF which by default generally involves shutting an existing fund or moving to a pension is not financial advice, I will accept that contributions could be pure taxation advice.
By all means try to make the provision of financial advice more accessible (which it isn’t, which is why it is expensive) but don’t take away consumer protection for one section of the professional community which is just as conflicted as any other professional.
This is just a blatant grab by an accounting body to get their members a short cut — which is their job so good on them but don’t pretend it is being done for consumer benefit.
To even think of including SMSF establishment advice in this discussion is a massive step backwards. Since the exemption was taken out of the hands of accountants and proper due diligence was needed to justify the use of an SMSF for your standard investor, how many SMSF’s are we seeing established compared to previously? How is SMSF establishment advice the ‘bread-and-butter’? How could you possibly not include a comparison with retail/industry funds to make sure it stacks up?
Getting this through will be a win for ‘salesman’ accountants, which will tarnish the reputation of the ‘advisory’ accountants.
[i]”proper due diligence was needed to justify the use of an SMSF for your standard investor”[/i]
A touch sanctimonious, don’t you think? The last time I checked, it is the client’s money, and they are entitled to do with it as they please, due diligence or not, even if you don’t think it’s a good idea. That includes setting up a SMSF, even if only on a whim, or investing in swamp land in far north QLD.
Hmm financial planners with ethics, somewhat oxymoronic.
You know, I raised an interesting point then without realising it. Every thing that an accountant and their SMSF client do, is audited by an independent auditor, every year. How would the financial planners feel about having an independent auditor check every decision they had made through the year?
We get an annual audit which is much more comprehensive than what accountants go through and I would love to see accountants get a significant sample of their overall files audited fully each year. The SMSF audit is basically have the trustees followed the law, it’s hardly a high benchmark. This is one area I would love to see the playing field leveled up because accountants would be disappearing in the thousands.
accountants have very limited knowledge of the quagmire of legal landmines faced by licensed and qualified financial planners. very easy to be an accountant, very difficult to be a financial planner.
How do Accountants half give Advice on setting up a SMSF ?
How do they decide about rollovers ? If not comparing existing super funds.
What about Life Insurances in existing super being closed and or new Life covers in SMSF ?
So many components missed if cheery pick a few parts of the BS REGS mess to pullout of AFSL compliance.
[b]Cut the BS REGS massively overall. [/b]
That is the only real solution.
Level playing field for All with lower BS REGS.
No General Advice / sales by call centres = Product Information.
No hidden commissions paying for Intra Fund Advice, must be fully disclosed and paid for by client getting advice.
No Accountants carve outs, they massively abused it before.
Most of the issues I have come across in the last 30 years with respect of poor advice, either in rationale for establishment of an SMSF, or documentary trails (think of the 0%-100% for [i]every [/i]asset class Investment Strategy documents), or even poor actual advice on investments (even thought they have NEVER been allowed to ‘suggest’ actual investments) has come from accountants, almost always the only ‘win; being in accounting fees.
To go back to this idea of accountants being able to provide advice without actually meeting the same complaince that a financial planner must meet is to say that there are occasions when advice CAN be given that doesn’t need an SoA or all of the other legal burdens that we have been hammered are ESSENTIAL.
This would be an indictment if these exemptions are introduced and would be a slap in the face to all the financial planners who have had to jump over hurdles e.g. FASEA exam, upgrade to Bachelor or Post Grad studies, and so on, to remain a financial planner so they could give advice. Accountants have had it to easy with all of these exemptions in the past. Please, “Bread and Butter”. Accountants have been pushing boundaries for years when it comes to financial planning advice. Even now, accountants are skirting the boundaries of providing advice and the associations know it. Now they want to give advice without doing the hard yards. How many clients have had SMSF set up simply so accountants could charge large fees…lots! C’mon…keep accountants to the tax and let the professionals do the financial planning that actually have the qualifications. Have both parties looking after the client so there is less chance of a conflict of interest occuring. Do accountants think we are where we are today because a few financial planners did the wrong thing? I beg to differ…accountants are equally to blame for where we are and for the increased legislation requirements.
It’s the next move by ASIC in destroying financial planning. Basically accountants, industry funds and banks will be able to operate on what is effectively general advice within 5 years. Which is what the industry funds and banks wanted from the RC and in relation to the accountants it shows the value of patient long term lobbying.