Accountant advisers lobby on fee reform
The new industry body representing the interests of accountants practicing as financial advisers, the Accountant Financial Advisers Coalition (AFAC), is preparing its arguments against elements of remuneration reforms being proposed by the Accounting Professional and Ethical Standards Board (APESB).
The reforms proposed by the APESB go further, and aim to be introduced a year earlier, than the Labor Government’s Future of Financial Advice (FOFA) reforms, as well as those proposed by the Financial Planning Association and the Financial Services Council.
The new standard would require adviser members of CPA Australia, the Institute of Chartered Accountants and the National Institute of Accountants to adhere to a strict fee-for-service model, which in addition to excluding commissions would exclude any form of asset based fees.
AFAC chairman Andrew Gale met APESB chairman Kate Spargo to discuss his association’s concerns. Gale said there had been a “realisation that there’s some significant issues to work through”. The deadline for submissions regarding the exposure draft, originally scheduled for next week, has been extended until 15 October.
AFAC is yet to make a formal submission, but in doing so will raise a number of issues regarding the APESB’s exposure draft.
“The exposure draft is predicated on the principle that certain fee-for-service models [including asset based fees] are incongruent with fiduciary duty. We’ve certainly got a different view on that and we would be challenging that contention,” Gale said.
“There’s a range of fee models out there, and we don’t believe it’s the role of the standard to be prescribing which ones are permitted and which are not. It should be based on a principle — that it’s professional, that fiduciary duty is being fulfilled, and that there is an assent arrangement between the provider and the client.”
AFAC is concerned about the retrospective nature of the requirements, with the rules to apply to both new and existing clients, and that the APESB’s timetable for reform is inconsistent with others already underway. Furthermore, Gale said the exposure draft presumes full, comprehensive advice and fails to consider the provision of intra-fund and limited scope advice.
Ensuring the affordability and accessibility of advice as expressed by the Labor Government in its FOFA reforms is another of AFAC’s priorities, Gale added.
AFAC includes representatives from accountancy based dealer groups including Count Financial, Professional Investment Services, WHK Group, Securitor and DKN/Lonsdale and represents around 1,700 accountant financial advisers.
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