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Accountants in the financial advice sector need to focus on the future, with radical improvements to a “tattered” financial services industry imminent.
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The mismatch we face in financial advice
11 September 2018
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10 minute read
There’s widespread agreement amongst Chartered Accountants that the current regime is not working for accountants who want to provide for, and look after, the financial affairs of Australian families who work hard, and for the small to large businesses who are the backbone of the Australian economy.
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Our members want to see trust brought back into the system.
Looking back on the original objectives of the Future of Financial Advice (FoFA) reforms – to improve the trust and confidence of Australian retail investors in the financial services sector and ensure the availability, accessibility and affordability of high-quality financial advice – there has been a failure.
With the proposed FASEA reforms, affordable financial advice will become harder to get for many Australians, and the proposed impost on accountants will see many of our best CA practitioners forced out, or at least contemplate leaving.
While our members don’t agree with it, they understand that all advice practitioners in the industry will have to pass an exam prior to 31 December 2020 as it’s enshrined in law.
Fed up
Chartered Accountants, due to their rigorous training, strict adherence to a Code of Ethics and significant ongoing CPD have enjoyed the trust and confidence of many Australians. It would therefore be most detrimental to the public’s interests to see many CAs leave the retail financial advice space. From our member survey conducted in May this year, up to 60 per cent of CA ANZ advice practitioners said they would likely stop providing financial advice if the education reforms came in as proposed, while a further 20 per cent said they were undecided about what they would do.
And as many of our members can attest, compliance costs and the regulatory burden of being in practice have skyrocketed.
So, we have a royal commission showing Australians that much of the advice provided by a vertically integrated system has been poor, to say the least. Yet we have a body of professionals called Chartered Accountants, who are some of the most trusted advisers in Australia, being forced out of the industry due to additional proposed new study requirements. There seems to be a mismatch.
Looking ahead
One argument put forward to ease the situation is to reinstate the accountants’ exemption. However, while many members think this would be a good idea, CA ANZ believes we need to look further ahead and seek foundational change across the whole financial advice regime, and this time get it right.
Fortunately, the findings of the Hayne royal commission will assist enormously in shaping the future and CA ANZ looks forward to those findings so we can sit down with FASEA and the regulators, map out a plan of attack, and get the trust balance right. CA ANZ is keen to work with FASEA to help move the advice industry up the professionalism curve, by looking to provide various tools and resources currently utilised in the CA post-graduate program.
Accountants are trusted everyday advisers in the suburbs and country towns of Australia and are well placed to help mums and dads into their retirement. And every small business has a huge need for trusted advisers who give holistic advice on their business and personal circumstances.
As we have told FASEA in our submissions over the last couple of months, the public interest will be best served by retaining accounting professionals in the financial advice industry.
Our members operate within a highly qualified and professional framework and are held accountable to the principles set out in professional standards.
We are not opposed to raising standards of financial advice. In fact, quite the opposite. The objectives of the original FoFA reforms to better serve and protect consumers were correct.
So, we are about to go through a second opportunity to get it right. Let’s all do it properly this time.
Simon Grant, group executive – advocacy and professional standing, CA ANZ
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