The Accounting Professional & Ethical Standards Board (APESB) will revisit its draft standards relating to accountants who give financial advice in view of the recent passage of government reforms through the toughest part of Parliament.
APESB chair Kate Spargo said the board would decide at its next meeting on 17 May whether to finalise its APES 230 exposure draft on financial advisory service standards or consult further as a result of the reforms.
The government’s Corporations Amendment (Future of Financial Advice) Bills were approved last month by the lower house. The bills, more commonly known as Future of Financial Advice (FOFA) reforms, are widely expected to pass the Senate, which next sits in May.
“We’ve been working on it while watching what’s been happening to FOFA,” Spargo said.
“The question is whether there needs to be just a little more consultation.”
She said the APESB would have to reconsider the standards to account for FOFA.
“We’ll have to look at it and finalise it and see whether we’d be happy to finalise it at that time,” she said.
The APESB first issued the exposure draft for APES 230 in June 2010. It said at the time it aimed to implement the financial advisory standards on 1 July 2011.
“We started drafting it some time ago, before there was any mention of the changes around the broader financial planning profession,” Spargo said.
She said the board had been working on the exposure draft, with input from submissions.
“The timing of these things needs to be done in a way that makes sense,” she said.
“We don’t think people will need a long period to make changes to their systems and so on, but if there’s material change [to the standard as a result of FOFA], we’ll reconsider.”
APES 230 sets out requirements and guidance on the terms of financial advice service, including the basis for preparing and reporting financial advice and the accounting industry’s fee-for-service requirement.
Spargo said the major area of contention was the system of fees based on a percentage of assets.
“We consider that that’s not appropriate. It creates a conflict of interest and it’s seen as creating a conflict of interest,” she said.
“What we’re trying to do is ensure that whatever fees are charged, they’re not related to a conflict of interest. Even if they’re not, we don’t even want accountants to be seen to be conflicted over the amount of funds that a client gives them to manage.
“We think the better way to do that is to separate the concept of the volume of the fees, or the size of the fees, from the volume of the assets.”
