Media Release

Joint Accounting Bodies endorse ban on conflicted remuneration

Media statement issued by the Joint Accounting Bodies

(CPA Australia – Institute of Chartered Accountants in Australia – Institute of Public Accountants)

Removing conflicts of interest in the provision of financial advice is strongly aligned to the accounting profession’s principles of professional independence, and can only serve to build consumer trust and confidence in seeking advice, according to the Joint Accounting Bodies.

The second tranche of the Future of Financial Advice (FoFA) reforms – released yesterday – reflects the Joint Accounting Bodies’ long-held view that a fee for service approach in the provision of financial advice is in the best interests of both the client and financial planner.

While many industry participants have proactively commenced the move to various fee for service models the release of this draft legislation will provide more certainty for the financial planning industry. With greater certainty financial planners can now focus on developing clear value propositions and concentrate on delivering quality financial advice services to their clients.

The Joint Accounting Bodies has strongly endorsed the ban of conflicted remuneration structures since 2005 when a professional standard was released encouraging professional accountants to adopt fee for service as a remuneration model and banning volume related remuneration structures. Since this time the Joint Accounting Bodies has advocated that conflicted remuneration structures have long acted as a barrier to developing greater consumer trust and confidence in the financial advice industry.

In addition to the best interest duty and the opt-in provision, banning conflicted remuneration structures presents the opportunity to advance the relationship between client and financial planner, placing the focus on advice, not the product.

The Joint Accounting Bodies will review the practical implications of the government’s draft legislation and respond accordingly.

Article last Updated 29 September 2011