FoFA isn’t the only set of rules that’s getting financial planning professionals all riled up, explains Jonathan Hoyle, partner at financial advisory firm Stanford Brown.
APES 230 is paternalistic, prescriptive and uncommercial. It should be torn up.
The Accounting Professional & Ethical Standards Board (APES) is an independent standard setting body for the three major Australian professional accounting bodies (CPA Australia, the IPA and the ICA). The APESB project to replace APS12 began in 2007 and has ended in the production of a draft and an explanatory note, now called APES 230. APES 230 sets the standard for the provision of ‘quality and ethical’ financial planning services for its members.
APES 230 will provide a significant boon for financial planning firms, as it will mean accountants will operate under a much more restrictive environment for providing financial advice. It is likely to remove any potential or existing revenue stream from adviser firm to accounting firm as a referral incentive.
As a large financial planning firm ourselves we are cognisant of the obvious benefits to our business, however the sheer ineptitude and scaremongering engendered in APES 230 compels us to add to the growing chorus of dissenting voices.
Submissions in response to APES 230 closed on 7 September. The Institute of Public Accountants (IPA) left no doubt as to their disdain for this controversial proposal with a tersely-worded submission, ending with a warning that should APES 230 not be amended, then “the Institute retains the right to issue our own pronouncement on financial planning services per our Constitution”.
The controversial elements of APES 230 are Sections 8 and 9, dealing with fees and third party payments. In essence, there are three highly controversial aspects of APES 230 that go well beyond FoFA:
Fees linked to assets under management are to be banned.
All product commissions are to be banned, including insurance and mortgages.
These rules are to apply retrospectively (no grandfathering).