Watered down APES 230 proposals revealed last week have been passed at a meeting of the Accounting Professional & Ethical Standards Board (APESB) on Friday, finalising the requirements for accountants providing financial advice.
The Financial Planning Services document issued by the board provides guidance on the contentious issue of remuneration for financial advice and 'best practice' for accountants seeking to comply with the broader regulatory requirements of the Future of Financial Advice (FOFA).
The board announced it has extended the FOFA Best Interests Duty to "all clients and financial planning services", including mortgage broking and other financial services not subject to FOFA amendments to the Corporations Act.
It also made the case for a fee-for-service remuneration model, reiterating its position that this model is most appropriate for accountants in the advice space, despite the fact that asset-based fees and third party payments have been permitted under the new standards in certain circumstances.
In a statement issued Friday, APESB chair Kate Spargo said the finalised standards should put to rest "remaining concerns" within the industry.
"We acknowledge that with the introduction of the federal government's Future of Financial Advice reforms, we are operating within a new framework and APES 230 has been finalised within that context," she said.
"The board strongly recommends to professional accountants that clients be charged on a fee for service basis for financial planning services to minimise the opportunity for conflicts of interest," she added.
A number of "safeguards" have also been stipulated, including a requirement for annual fee disclosure and comparative quotes for insurance services.
However, the statement indicated the board will now monitor the use of asset-based fees in practice and the effectiveness of the safeguards.
"If the safeguards prove to be inadequate, we will re-adress the issue of conflicted remuneration in the future," Ms Spargo said.
A majority of the standard will be effective from 1 July 2014, with the exception being the remuneration provisions that will commence on 1 July 2015.
CPA Australia and the Institute of Chartered Accountants Australia (ICAA) supported the passing of the new standard in a joint statement.
With the standard set to impose higher obligations than those imposed by the law, CPA Australia chief executive Alex Malley said consumers "expect a lot from professional accountants".
"The end result of the five-year consultation is a new professional standard that requires higher levels of professional service and disclosure than the law. At the same time, it balances these obligations with the evolving environment in which financial planning and credit advice is provided to consumers," he said.
"APES 230 reflects the high expectations of consumers and the overriding responsibility of the profession to act in the public interest, and ensures professional accountants set a higher benchmark in the advice they provide."
In a statement, the Institute of Public Accountants said it remains firmly of the view that it is "illogical to impose a higher regulatory burden on professionally qualified public accountants to that imposed by the Future of Financial Advice reforms."
This creates an unlevel playing field and opens the door for regulatory arbitrage, the IPA stated.
It said the FOFA reforms strike a sensible balance and enable accountants to provide a range of financial advice underscored by the added safety net of strong professional and ethical standards.
It said it would analyse the revisions to APES 230 closely to compare them with the FOFA provisions. The IPA board of directors reserves the right to issue a pronouncement if it believes the proposed standard is contrary to its members' best interests, the IPA said.
