The Institute of Public Accountants (IPA) has refused to support the Accounting Professional and Ethical Standards Board’s (APESB) proposed financial planning services standard, stating the federal government’s advice reforms already provide a universal standard.
In a submission to the APESB, the accounting body’s chief executive, Andrew Conway, said the IPA had decided it was “unable to support APES 230 as currently proposed”.
“[The] institute’s concerns with the proposed standard have been articulated on a number of occasions, particularly through the JAB (joint accounting bodies) submission on proposed APES 230 in 2011,” Conway said in the submission, dated 7 September.
“The profession has considerable concerns regarding the current form of APES 230 and the institute again encourages the APESB to address these concerns as a matter of priority.”
He said it was the IPA’s view that issues of practice management and fee structures were commercial decisions to be made by members and should not be matters for consideration by the APESB, unless in exceptional situations.
“There may be circumstances where fee structures seriously compromise standards of ethical and professional behaviour and for which no safeguards exist,” he said, making reference to contingent fees for tax or audit work.
“However, the [IPA] remains unconvinced by the arguments raised by the APESB that the remuneration models proposed should be banned under APES 230 on the basis that no other safeguards can be adopted to reduce potential threats to an acceptable level.
“If firms are able to implement such fees models with appropriate safeguards, then they should be free to do so.”
The IPA also did not support “retrospective obligations” and therefore did not support the “attempt to apply retrospectivity to certain commercial arrangements through APES 230”, he said.
“The institute is keen to ensure that members providing financial planning services do so with the utmost integrity and professionalism. Professional ethics is the cornerstone on which the accounting profession stands,” he said.
“To this end, should the APESB not further amend proposed APES 230, the institute retains the right to issue our own pronouncement on financial planning services per our constitution.”
He also said the institute wished to stress its previous views to the APESB that the proposed standard, if adopted, would “unfavourably impact the accessibility and affordability of financial advice for Australians”.
“In addition, we see no valid reason for attempting to strike a different standard to that imposed by the Future of Financial Advice (FOFA) reforms and believe that both the other provisions of APES and the statutory provisions contained in FOFA provide the best model to proceed and achieve a practical outcome for members and, importantly, is in the clients’ best interests,” he said.
“Our preference is for the APESB to take into account the majority view of the profession and to ensure APES 230 has universal acceptance.”
The APESB’s proposed standard “APES 230 Financial Planning Services” is intended to replace “APS 12 Statement of Financial Advisory Standards”, which was issued jointly by CPA Australia and the Institute of Chartered Accountants in Australia in 2005. The IPA did not have a similar standard, Conway said.
