Accountants get their slice of the financial advice pie
While the industry has given a broad welcome to the limited licensing regime, accountants will need to be subjected to the same scrutiny as financial planners, writes Mike Taylor.
In the end, the restricted licensing regime to be applied to accountants providing financial advice could have been announced around six months earlier.
That was when the policy formula was first canvassed as a sensible and viable replacement for the so-called “accountants’ exemption”.
And like so much of the Future of Financial Advice (FOFA) legislation, the efficacy of the Government’s approach will be determined in large part by the shape of the resulting regulations.
While the limited licensing regime for accountants is a better answer than the old accountants’ exemption, it may prove to be no less problematic in practice.
Once again, the devil will be in the detail and the market will have to wait for those details to emerge.
But notwithstanding the general industry welcome offered to the limited licensing approach for accountants, it is already obvious that the Government has created a multi-tiered regime where the provision of financial advice is concerned with different segments being inhabited by different players.
The accountants, of course, will have their limited license and, in the words of the minister, be "able to advise on self-managed superannuation funds and superannuation generally" and "give 'class of product advice' on basic deposit products, general and life insurance, securities, and simple managed investment schemes".
Superannuation funds and some of the larger institutional planning players will inhabit the scaled advice arena – the operating details of which are still being worked through by the Australian Securities and Investments Commission (ASIC), while fully-licensed financial planners will, as usual, have scope to deliver a total advice package.
There are enough Certified Practicing Accountants who are also Certified Financial Planners to know that the lines of demarcation between the accounting and financial planning arenas are necessarily blurred.
Thus, while the limited licensing regime for accountants is a better answer than the old accountants’ exemption, it may prove to be no less problematic in practice.
Then, too, there is the issue of scaled advice and the varying approaches of the superannuation funds and major institutions in terms of its delivery over the long haul.
One of the central objectives of the FOFA changes was to make advice both more widely available and more affordable, but in circumstances where the legislation was born out of the collapse of Storm Financial, it cannot be seen to be failing in terms of either its necessary lines of demarcation or consumer protection.
If the comments lodged by financial planners on the Money Management website are to be taken as a measure, there exists a strong belief that some accountants will find it difficult to remain within the confines of their limited licensing arrangements.
Beyond ensuring an appropriate regulatory regime to oversee the multi-tiered arrangements put in place by the Government, ASIC may be well-advised to subject the limited licensing regime applied to accountants to the same shadow-shopping scrutiny it has seen fit to apply to financial planners.
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