SPAA calls for changes to APESB proposed standard on how to charge for financial advice

From

Proposed standards will impose unreasonable and unsustainable obligations on accountants working as financial planners

The Self Managed Super Fund Professionals’ Association (SPAA) has called for amendments to an Accounting Professional and Ethical Standards Board (APESB) Exposure Draft, which, in its current form, will prevent SPAA members, who are also members of certain accounting bodies, from charging asset-based fees. While SPAA is opposed to commissions or fees embedded in a product, the association believes the definition of fee for service should be broad enough to reflect the skill, experience and level of complexity of the work being undertaken and be flexible enough to permit negotiation between a professional adviser and their client.

The APESB governs the rules by which many professional accountants must conduct themselves. A large proportion of SPAA’s members are accountants who also work as financial planners and are likely to be
affected by this proposed new standard.

“SPAA has taken a keen interest in reviewing the Exposure Draft on APES 230: financial advisory services because we believe it imposes unreasonable and unsustainable obligations on some SPAA members, namely accountants working as financial planners,” said Andrea Slattery, SPAA CEO.

“SPAA is committed to the highest professional standards, therefore we support the APESB’s proposed ban on commissions. However, unlike the APESB, we support an SMSF adviser’s right to charge assetbased
fees for service where these are not embedded or set by the product provider. As long as the fee has not been set by the product provider, advisers should have the right to charge a fee which has been agreed to by the client and reflects the services provided. We also note that the Federal Government’s proposed Future of Financial Advice Reforms (FoFA) does not seek to ban asset-based fees either.”

“In our comments on the APESB Exposure Draft, we also expressed our concern that the proposed APESB standard has an implementation date of July 2011, one year before FoFA is due to take effect.”
Ms Slattery said the Government consultation process would highlight other issues that should be considered before the release of APES 230.

“We agree APES 230 should apply to existing clients but only after an appropriate transitional period. It is difficult to foresee how a regime which provides for different standards to be applied to different clients
would be sustainable or desirable over the longer term. This transitional period should be sufficient to enable advisors to make the necessary changes to their existing charging practices and to ensure clients
can be transitioned to a new fee charging regime in an efficient and orderly manner,” Ms Slattery said.

You must be logged in to post or view comments.