Speaking to AccountantsDaily, Mr Smith said the significant cost incurred by accountants under the new licensing regime will, in most cases, be passed on to the consumer, pricing many out of advice all together.
“FOFA was all about providing better financial services to the consumer and I think it has fundamentally failed on that test,” Mr Smith said.
“The fact is that it is going to make advice unaffordable for many consumers.”
With continuing licensing and education costs, plus an increase in work associated with compliance, Mr Smith said it is unlikely that accounting firms will be able to swallow the costs of the new regime themselves. As a result, many end consumers will be asked to pay more for advice.
“Accountants will incur both initial and ongoing costs. Whether or not they can recover these from their clients, who knows, but it's definitely an additional cost that firms will be incurring that they would obviously like to recover," he said.
Mr Smith said the new regime may also disadvantage accountants and independent advisers in favour of the banks.
“To a certain extent, it has played into the hands of some of the bigger institutions, which can provider cheaper financial services because they’re also selling financial services products," he said.
As a result, accountants must ensure they are prepared for the new regime and carefully communicate to clients its intentions and implications.
“Whilst the vast majority of the accounting profession would like to see a completely different regime to the one we have got, I think there’s no chance in hell of that happening," Mr Smith said, "so I really think it’s up to accountants to get their head around it and to work out how they are going to price their services; how they’re going to communicate with clients; and probably most importantly, when this new regime comes into play on 1st of July, what are the processes they’re going to follow to ensure that they’re compliant with all of the laws too.”