On the surface, while accountants were not specifically targeted in Commissioner Kenneth Hayne’s final report, a number of professional accountants in public practice will be likely impacted by recommendations regarding financial advice.
Some of the recommendations laid out include a halt on all grandfathered commissions, a new disciplinary system that will require all advisers to be registered, and for ongoing fee arrangements to be reviewed annually.
“For example, in regard to professional accountants who offer financial services or mortgage broking services, the feedback already coming through is the value of their businesses has significantly dropped overnight,” CPA general manager of external affairs, Paul Drum told Accountants Daily.
“The recommendations add to the already uncertain future of the accounting, financial advisory and financial planning sector which are already under significant pressure as a consequence of other regulatory factors at play in the market.”
Mr Drum points to the new FASEA education requirements and ASIC’s industry funding model as two examples of regulatory factors that will weigh heavily on accountants.
“Both of these are causing members to evaluate whether they continue to offer particular services in the future,” said Mr Drum.
“Another example is the proposal to cap the deduction for the cost of managing tax affairs to $3,000 – a proposal that has many accountants concerned not only for their future income earning ability, but also their clients compliance with complex tax laws.
“Not only is this of detriment to these businesses, ultimately consumers will be worse off as access to these services and quality advice is reduced and costs go up.”
Likewise, CA ANZ tax leader Michael Croker believes the report will weigh heavily on accountants who provide financial advice services, particularly where greater regulation is recommended.
“To say there is confusion about where tax advice ends, and financial planning advice begins, is a massive understatement. Throw SMSFs into a client conversation and the boundaries become even more blurred,” said Mr Croker.
“The final report cites the Tax Practitioners Board as a reason for recommending the mandatory individual registration of financial planners but the commissioner fails to mentions the TPB’s own struggle with demarcation lines between different types of service providers.
“Hayne favours ‘a single, central disciplinary body for financial advisers’ but does not expound on his preferred model, acknowledging the resourcing issues and suggesting this is a matter for government.”
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Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.