The Institute of Chartered Accountants (ICA) has hit out at suggestions advice given by accountants is under greater scrutiny following the collapse of agribusiness firm Great Southern.
The listed agribusiness firm announced its collapse earlier this week, with receivers appointed to the company late on Tuesday.
While it is less than a week after Great Southern’s fall, it is understood more than 600 investors are mounting a class action against the firm.
Great Southern is estimated to have had more than 40,000 clients.
On Tuesday, the FPA said they believed few financial planners were involved in advising their clients to invest in Great Southern’s managed investment schemes (MIS), with the majority of advisers promoting the schemes actually being accountants or people authorised by the product issuers to sell their products.
Another element of concern is the fact accountants and other authorised persons received commissions of up to 10 per cent to sell the products.
The issue of a commission remuneration model is also a concern for the institute.
The ICA intends to continue to work with the government, through the current reviews of the financial services industry, to address licensing and remuneration issues in the industry, an institute spokesperson said.
“In light of the recent events and difficulties with various corporate collapses including Westpoint, Storm and Timbercorp, the institute’s views on the remuneration debate are unchanged,” the spokesperson said.
“The institute has led the debate on universal adoption of a genuine, non-product-based, fee-for-service remuneration model which will lead to a relationship of greater trust between advisers and their clients.”
In 2007, the institute published a paper arguing that for a sustainable long-term future the industry needs to collectively recognise the need to remove remuneration models, which are based on percentages, and replace them with genuine fee-for-service arrangements that have no connection with products or investable funds.
