Financial advisors await reforms clarity

Key Points

  • There are further developments in the financial advisory services industry in light of consultation on APES 230 and the release of the Australian Securities and Investments Commission (ASIC)'s consultation paper on scaled advice
  • The Institute will respond to ASIC’s recently released a paper that provides guidance on how to scale advice
  • The professional accounting bodies have provided updated information on how accountants may be affected by a replacement of the accountants’ exemption, and now await clarity from Treasury and ASIC.

They say change is inevitable, and the draft standard APES 230 and the Future of Financial Advice (FoFA) reforms are set to change the way practices providing financial advice operate.

It’s important for members to keep abreast of the latest information that will affect your day-to-day work.

APES 230

The Accounting Professional & Ethical Standards Board (APESB) is continuing its consultation process surrounding its draft standard, APES 230, with a meeting held on 15 and 16 August.

As outlined in the APESB Stakeholder Engagement Plan, participants at the consultation sessions held in Melbourne and Sydney consisted of representatives from the financial advisory services industry, including the CEOs from the three professional accounting bodies. Some of the most significant issues in the draft standard include:

  • The scope of the standard
  • Fiduciary duty
  • Remuneration models.

Following this latest consultation process, it is expected the APESB will incorporate industry feedback to develop and release a new exposure draft for public comment later in 2011.

FoFA update

There continues to be ongoing discussions on a number of the FoFA reforms, with a further delay expected on the draft legislation.

Scaled advice

As part of the government’s reform package to increase access to advice, the Australian Securities and Investments Commission (ASIC) has released Consultation Paper 164 Additional guidance on how to scale advice to provide guidance on how to scale advice. This follows research by ASIC last year that indicated consumers often want piece-by-piece, rather than holistic or comprehensive advice. Feedback from the industry also indicated that further guidance was required.

Specifically, ASIC is aiming to provide guidance and examples of scaled advice by outlining the differences between factual information, general advice and personal advice.

The Institute will be making a submission in response to this paper. Members who would like to provide comment or feedback for consideration can contact us via email.

Accountants’ exemption

Discussions on a replacement for the accountants’ exemption continue as we await further details from ASIC and Treasury. This follows the Joint Accounting Bodies’ (JAB) representatives’ provision of additional information on the implications of their current proposal. The CEOs of the JAB are continuing to meet to discuss potential solutions until a pragmatic solution is developed.

Mr Elvy says the JAB has provided Treasury and ASIC with updated information and scenarios on how accountants could be affected by proposed reforms and the role professional accountants play to their clients.

'We continue to lead the dialogue with Treasury and ASIC to ensure they have a full understanding of what accountants do on a day-to-day basis,' he said.

The Financial Advisory Services webpage contains the most up-to-date information about all the issues affecting financial advisors. 'Members can bookmark this page to stay informed on all the changes in the industry,' Mr Elvy said.

Article last updated 17 August 2011