Along with the Government’s super reforms, another announcement on Friday was the release of APES 230 Financial Planning Services. The standard will set out the requirements for accountants to provide financial advice, and the key area of discussion was remuneration.
The Accounting Professional and Ethical Standards Board (APESB) have come to a compromise on the topic of remuneration. In an attempt to remove threats of conflict of interest, the Board’s “strong preference” is for accountants to be remunerated on a fee for service basis. However, it has permitted the use of asset-based fees and third party payments, if the accountant is able to gain informed consent from the client.
There will also be “additional stringent procedures” designed to safeguard the interests of the client, including annual disclosure to the client about the actual and estimated amount of the fees, comparative quotes in the case of insurance, and disclosure in relation to the impact of changes in fees.
The IPA is still calling for guidelines more closely aligned with FoFA, however: “We remain firmly of the view that it is illogical to impose a higher regulatory burden on professionally qualified public accountants to that imposed by the Future of Financial Advice Reforms (FoFA) legislation. To do so would create an unlevelled playing field and open the door for regulatory arbitrage.”
CPA Australia and the Institute of Chartered Accountants Australia have welcomed the standard, and CPA Australia’s chief executive Alex Malley FCPA says the end result is a new professional standard that requires higher levels of professional service and disclosure than the law.
“APES 230 reflects the high expectations of consumers and the overriding responsibility of the profession to act in the public interest, and ensures professional accountants set a higher benchmark in the advice they provide,” he says.
Accountants have expressed concern about the insurance aspect the APES 230 brings, and the written consent needed from the client. Christian Beltrame from BKM Financial Services says the standard is difficult in that it is a party agreement between the client, adviser and insurance company. Beltrame says it is not on par with FoFA reforms, which consist of two parties and don't need to be disclosed.