The Minister for Financial Services and Superannuation remains tight lipped over the details of the planned removal of the accountants’ exemption under the government’s advice reforms, prompting two of Australia’s peak accounting bodies to take public action.
Yesterday, CPA Australia and The Institute of Chartered Accountants in Australia released a joint public statement in the form of a full-page advertisement in the Australian Financial Review.
The advertisement, which InvestorDaily understands cost the associations thousands of dollars in members funds, was published out of a need to warn the Australian public of the risks to their financial security.
“Without breaching confidential discussions, we wanted to send a signal to the market and Australia. A lot at stake at the moment,” CPA Australia head of business and investment policy Paul Drum told InvestorDaily of the decision to publish the statement.
“Certainly there is an element of lobbying about it. But I think it’s more about taking to the public some of these things that suffer from inertia and gets stuck behind closed doors. We feel we were duty bound in a public interest sense.”
The letter is the second the associations have jointly published since the release of the government’s Future of Financial Advice (FOFA) reform legislation. The first letter was published in February this year.
Opposition assistant treasury spokesman Mathias Cormann also weighed into the debate, calling on Bill Shorten to end the “two years of uncertainty” and reveal his intentions about the exemption.
“[The minister] should heed the advice he has received and make sure that any changes to accountants’ licensing requirements will not impose unnecessary additional red tape and costs for small business professional accountants,” Cormann said yesterday in a statement.
As spokesman from Minister Bill Shorten’s office told InvestorDaily yesterday: “The minister is in confidential discussions with accounting and financial planning associations.
“This has taken time, but does allow for thorough consultation. We await feedback from industry about the proposal the Minister has put to them.”
Institute of Chartered Accountants in Australia head of superannuation Liz Westover said the institute feels “the government is not heading in the right direction”, with the consumer set to miss out.
“They’re not going to be getting the advice they need from their valued and trusted adviser,” Westover said.
“The main thing is the framework to even get the accountants licensed is still not hitting the mark. Under the current framework it would still be difficult for a lot of accountants to even get licensed, particularly sole practitioners and the smaller firms.”
Westover said under the current licensing framework a sole practitioner could never satisfy the relevant experience component.
“The current model says you need to have a responsible manager to have a licence and that responsible manager has to be able to demonstrate relevant experience where they would have worked under another licensee,” she said.
“A sole practitioner will never have worked under another licensee so they can’t demonstrate the relevant experience ASIC requires for the single AFSL [Australian financial services licence] model.”
Both Westover and Drum said the government needs to come up with a workable solution.
“We need to make sure we come up with a workable solution that enables accountants to come under a licensing model that allows them to give the advice the clients are asking them for and that is strategic non-product advice,” Westover said.
“We have supported a licensing model for accountants. We have been willing to talk about the right framework but at the end of the day it’s got to be workable for accountants and workable for the nine million Australians that use the services of a professional accountant.”
“The government is not moving fast enough and not moving in the right direction to find the right outcome for Australian consumers.”
Drum said while there is noise that the exemption may be deferred, there has been no concrete information provide from government.
Westover said at present no date has been set for the removal of the accountants’ exemption.
“Originally when it was announced they were talking about its removal from 1 July 2012 and finding an appropriate replacement,” she said.
“Since then there has not been any confirmation on the actual removal date. We would expect the same approach be applied to the accountants under this new regime as has been the case with financial planners under the tax agents services regime.”
Earlier this week the government extended the deadline for the implementation of the tax agents services regime by another 12 months. Financial planners looking to provide tax advice will now not have to become a registered tax agent to do so until 1 July 2013.
