Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Advice gap grows as accountants reconsider service offerings due to regulatory burden

Promoted by CPA Australia.

A landmark report released this week from CPA Australia shows consumers prefer their accountant to be a go-to source of financial advice. However, the ever-increasing regulatory burden is forcing many public practitioners to reconsider the types of services they provide, contributing to the already looming advice gap that could see more members of the public left in the dark.

Sponsored Features CPA Australia 02 October 2019
— 3 minute read

When clients ask their accountant a simple question, they are now more likely to receive a complex and costly answer as the burden of regulatory compliance continues to grow. New research from CPA Australia reveals just how onerous compliance is becoming for public practitioners and reveals some concerning flow-on effects for the public.


Keddie Waller, Head of Public Practice, CPA Australia, said that while effective regulations are vital to overall market efficiency and consumer protection, the complex nature of Australia’s current regulatory environment is seeing public practitioners struggling under the strain. CPA Australia’s Regulatory Burden Report also found that associated costs are on the rise.

“For one in four practitioners, about 20 per cent of their revenue is spent on meeting compliance costs, and more than half of respondents said this cost has increased in the past 12 months,” Waller said. 

“On average, two full-time members of staff are dedicated to compliance obligations, and this staffing cost does not result in revenue generation, which puts additional pressure on public practice owners.”

Accountants at a crossroads

Stephen Jones FCPA, a partner at ATM Consultants in Victoria, has firsthand experience of the impact of regulatory burden. A tax agent in the two-partner firm, Jones is also licensed to provide financial planning advice. However, he is currently questioning whether to continue his advisory work.

“I expanded into financial planning a few years ago, but now I’m at a crossroad,” he said. 

“I’m not sure that we can afford to continue to provide a high level of financial planning service because the cost of regulatory compliance is so high. It’s hard to justify the cost to clients.”

Jones added that a lack of alignment for continuing professional development (CPD) requirements is adding to the regulatory burden.

“In December last year, I calculated that I had completed 250 hours of CPD in 12 months, but I still hadn’t ticked off all of the requirements,” he said. 

CPA Australia research shows regulatory compliance is particularly onerous for financial planning advisory. Currently, 24.2 per cent of its members offer the service, however 12.5 per cent state they are considering ceasing this and only 3.7 per cent are planning to offer it as a service in the future. 

As a result, only 15.4 per cent of CPA Australia members are expected to offer financial planning advisory services in the coming years.

Important needs are not being met

Increased regulatory complexity often means that accountants have less time to spend with clients, or they need to increase their costs to provide advice. This makes it harder for consumers and SMEs to access this valuable service and will contribute to the current significant lack of financial literacy amongst the public. It might also leave small business owners without a trusted advisor on financial matters. 

CPA Australia’s Regulatory Burden Report shows that almost 10 per cent of consumers and 28.6 per cent of SMEs have not been able to get the advice they needed because their accountant didn’t hold the specific licences or registrations. Among those who were unable to get advice from their accountant, two in 10 consumers and six in 10 SMEs did not go on to get advice from other specialist service providers.

“Important needs are not being met,” Waller said. 

“Just over 60 per cent did not seek specialist advice, yet this kind of advice is crucial, especially in an SME’s first three years.”

CPA Australia CEO Andrew Hunter said the report’s results bring to life the potential future impact of regulatory burden.

“For example, one in three public practice members are considering ceasing to offer some of their current services due to compliance obligations, with the impact strongest on financial planning and SMSF audit services,” Hunter said.

Calling for more advice – not less

Hunter added that while regulations are vital, the current burden is too great.

“We need to identify how we can reduce legislative complexity – and harmonise obligations – to remove inefficiencies and associated costs, while providing real and effective consumer protections and encouraging the broader community to seek advice,” he said.

To reduce the advice gap and address the growing compliance burden for public practitioners, one of CPA Australia’s key recommendations is for a review of the definition of key terms, such as general advice and financial product advice.

More than 60 per cent of CPA Australia members who offer financial planning advice also believe a new definition for strategic financial planning advice should be created. This would have broad benefits, with eight in 10 consumers and three in four SMEs stating they would find strategic financial planning advice appealing.

CPA Australia also advocates for the introduction of individual licensing or registration of financial advisers – something that almost 60 per cent of members support. 

To address duplication and excessive CPD obligations, CPA Australia is calling for an alignment of codes of ethics and CPD requirements as well.

“The cost of compliance is becoming far too great and the public is at risk of missing out on valuable advisory services,” Waller said.  

“There is a significant gap between policy intent and what is happening at the coalface of public practice, and it needs to be addressed.”

Read the full CPA Australia’s Regulatory Burden Report here.

Advice gap grows as accountants reconsider service offerings due to regulatory burden
image intro
accountantsdaily logo
Sponsored Features