Australia’s peak seniors advocate, COTA Australia, is worried older people will continue to be given poor or tainted financial advice by Accountants if their Professional and Ethical Standards Board caves into sections of the industry wedded to commissions‐based practices.
The Accounting Professional and Ethical Standards Board (APESB) meets today to consider new professional standards for Accountants. The Board had recommended a ban on all forms of commissions on financial products but it looks like this may now be considerably watered down.
The Board’s original position in relation to commission based practices that strongly stated that:
“8.1 Charging a Client a professional fee based on the value of the Client’s assets or funds under management (or changes in such values) … and 9.1 The receipt by a Member in Public Practice of Third Party Payments or Soft Dollar Benefits in relation to a Financial Planning Service creates threats of self‐interest and/or advocacy which impact on the Member’s ability to comply with the following fundamental principles of the Code: Integrity; Objectivity; and Professional competence and due care. No safeguards can reduce this threat of self‐interest to an Acceptable Level. (Proposed Standard: APES 230 Financial Planning Services. Accounting Professional & Ethical Standards Board Limited (July 2012))
COTA Australia Chief Executive Ian Yates said the Board was reportedly about to do a back‐flip and allow Accountants to continue to accept commissions and third party payments as long as they disclose this to clients – but the clients will have not have a choice of method of payment.
“The Board seems to be caving in to the pressure of some self‐interested professionals who would prefer to get rich from commissions rather than operate with integrity, objectivity and due care,” Mr Yates said.
“The Storm Financial, West Point and other financial collapses highlight just how vulnerable sections of our community are to the quality of financial advice offered to them by industry professionals.
“No Australian should suffer the indignity and hardship of losing the proceeds from a lifetime of hard work due to conflicted payments such as third‐party commissions and soft payments.
“The loopholes in the amended new standards falls short of the high standard of behavior the Board originally proposed for the Accounting Profession, retaining the danger of unethical conduct by advisers channeling investors into products for which they receive a commission.
“The backdown leaves the industry open to ongoing questions about conflicted payment that client disclosure recommendations can never alay, as the Board itself admitted in its original receommnedations.
“Older Australians are particularly exposed when signing financial documents which they may not fully understand, thus making decisions that may place their financial future at risk, with virtually no chance of re‐couping lost assets.
“The new standards have been five years in the drafting; the Board has a vital opportunity this Friday to ensure they do not fail at the last hurdle.
“Older Australians, vulnerable social groups and the Accounting Profession would be best served if the Board met community expectations by insisting that Accountants ban all commissions and third‐party payments,” he said.
Media contact: Ian Yates 0418 835 439, Jane Garcia 0434 489 533
