The Accounting Professional and Ethical Standards Board (APESB) plans to forge ahead and introduce a new mandatory standard ‘APES 230 Financial Advisory Services’ once the dust settles surrounding FoFA. The exposure draft for the new standard, which was issued back in 2010, included provisions for a compulsory fiduciary duty, professional independence and strict fee-for-service advice provision.
The “fundamental principle” behind the introduction of the new standard is that “members who provide financial advisory services act in a fiduciary relationship and in so doing they must remove conflicts of interest”. The final version of the standard is expected to include a prescribed fee-for-service model that will outlaw all asset-based charges.
Other conflicts of interest, such as common offers from platforms to provide planning businesses with software or offers to attend conferences, that may not be captured under FoFA in its current form would put accountants in breach of the new standard.
The consultation process for APES 230 has been ‘drowned out’ by the noise surrounding FoFA. Members of the APESB have now provided their feedback and most of the key provisions of the standard are expected to survive the consultation process, she said.
The new requirements will apply to all new and existing clients from the date the standard comes into effect, including clients for which the accountant/adviser is currently receiving trail commissions.
At this stage ‘advice’ covered by the new standard will include advice related to life insurance and even to issues not covered by an AFSL, including real estate and financial strategies and structures.