Accountants reject APES as FoFA swings into action

11 responses to “Accountants reject APES as FoFA swings into action”

1. 

   Matthew Ross

   February 26, 2013

   The IPA are kicking and screaming about this, but the CA and CPA aren’t, are they?

   I must confess, I’d never heard of the IPA before this article. All the accountants I’ve dealt with are with the CA and CPA.

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2. 

   Pro Consumer

   February 25, 2013

   For years now I have listened to Accountants denigrate Financial Planners primarily because they receive commissions and because of the conflicts that are thus created. Now, as we sit on the verge of a new world order where Financial Planners are banned from conflicted remuneration, it appears that Accountants want to reject APES230 because it does too thorough a job of removing conflicted remuneration from the clutches of Accountants. What a sad day it was when I discovered that Accountants are the new Financial Planners. Come on – put the best needs of your Clients first. The person who truly has their Clients interests at heart and the person who can justify commissions cannot co-exist. Time to make some tough choices and be judged accordingly.

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   1. 

      Jamie Forster

      March 1, 2013

      “The person who truly has their Clients interests at heart and the person who can justify commissions cannot co-exist.”

      Why not?
      One of the immutable principles of the established professions is that the client or patient must come first and they have all operated with conflicted remuneration models for as long as they have been around.

   2. 

      Matthew Ross

      March 1, 2013

      Jamie, are you referring to commissions on insurance or both insurance on commissions AND investments.

   3. 

      Jamie Forster

      March 1, 2013

      Hi Matthew
      Both.
      Regards
      Jamie

   4. 

      Pro Consumer

      March 2, 2013

      Jamie – respectfully I’d be the first to acknowledge that the overwhelming majority of professionals (in all walks) truly strive to adhere to the ethos you have espoused. However, if you earnestly believe that a Medical Profession in the grip of the Pharmaceuticals Industry or the Financial Services Professions in the grip of Product Manufacturers is ultimately in the best interests of the Client (Consumer) then I’m afraid you are either naive in the extreme or the brainwashing campaigns of the big boys has worked. If these Professions really want to walk their talk why would they complain about removing the conflict rather than “operating with conflicted remuneration models”. People have been selling drugs to school children for as long as I can remember. That doesn’t justify its continuance or make it best practise.

   5. 

      Jamie Forster

      March 4, 2013

      Hello Pro
      Consumer (Whoever you are, I’m sure that the irony of maintaining your ongoing anonymity
      in a debate around conflicted relationships is not lost on you.)

      You areconflating the debate on methods of remuneration and the debate on product
      manufacturers ‘owning’ the means of distribution. (I’m not so sure that you appreciate the irony in conflating arguments in a debate on integrity.)

      You are also over-simplifying the conflicted relationships that all professions deal with.
      With respect to your example, whilst there has been advocacy and legislation in relation to the relationship between doctors and product manufacturers, doctors are still employed by hospitals and medical practices. This relationship gives rise to numerous conflicts in relation to revenue targets, a requirement to use
      that hospital’s facilities (for which the patient is, of course, charged), the potential for over-servicing and so on.

      By the by, in relation to the regulations on doctor’s relationships with product manufacturers, you may or may not also be aware that there has been quite a bit of discussion about whether they have in fact been in consumer’s best interests with a lot of
      experienced industry practitioners holding the view that the unintended consequence of the regulations has resulted in worse outcomes for consumers.

      As to drawing an analogy between commissions and selling drugs at school, I am not sure if you
      have completely missed the point, being deliberately offensive in order to draw a reaction or simply being hysterical.

      Giving you the benefit of the doubt, I will assume that you have missed the point.

      The point I was making is that commissions are no more conflicted than other methods of remuneration including alternative methods currently being adopted within the financial planning industry. Furthermore, the established professions have lived with and managed that conflict effectively and ethically for as long as they have been around.

      The issue isn’t whether there is a conflict of interest but to accept that where a service provider is providing a service for a fee that, no matter how that fee is charged, a conflict is inevitable. It is not creating an illusion that no conflict exists that matters but effectively managing the conflict.

      Unless, of course, you don’t have the personal integrity to effectively manage conflicts ethically, in which case I can see why you would wish to
      attempt to create the illusion that no conflict exists.

   6. 

      Pro Consumer

      March 7, 2013

      Jamie,

      “Who you are speaks so loudly I can’t hear what you’re saying.” (Emerson I believe)

      If you’re so convinced that “professionals” will do the right thing by their Clients despite the temptations of conflicted remuneration – then try this “Pepsi Challenge”.

      Right now thousands of Financial Planners and Accountants are using the “mere referral” loophole in the NCCP Act to give actual or implied advice to Consumers and receive upfront and trailing commissions from the Lenders (Product Manufacturers). They are doing this despite their lack of training or licensing in Credit Advice and without sufficient data or tools to even know whether their recommendation is in the Client’s best interest. In fact I estimate there are more ‘unlicensed Credit Assistants’ in Australia currently than licensed ones.

      Apart from the very rare ‘fluke’ not one of these referrals is in the Client’s best interests – but it is certainly in the Referrer’s financial interests.

      And when I say very rare ‘fluke’ – I mean the same statistical anomaly that allows an infinite number of monkeys let loose on an infinite number of keyboards eventually produce the script for MacBeth.

      It is this sort of behaviour that APES 230 would ban. But you’re probably right – its clearly being managed brilliantly by the high-minded Professionals of which you speak – so why ban it and be certain?

   7. 

      Jamie Forster

      March 8, 2013

      Your point in relation to people without the appropriate training, providing advice in financial services is a good one. It is a shame that FOFA was obsessed to the point of distraction by remuneration methods and didn’t address this issue more thoroughly.

      After all, the one trait that is common to all of the traditional professions is a high minimum level of competence.

      I’d be interested to know who these “thousands” of people are who are exploiting the “mere referral” loophole. If you can point me to a source I’d appreciate it as I am told that 95% of people make up their own statistics.

      Furthermore, I am not suggesting that it is being “managed brilliantly”. In fact I am suggesting the exact opposite: that, as an industry, we are not managing conflicts of interest at all well let alone brilliantly.

      I just think that the proposed approach (a) fails to address all conflicts of interest, (b) will have adverse unintended consequences for consumers and (c) has distracted the industry from discussion more consequential issues (such as competency standards).

      Had I suggested that it was being “managed brilliantly”, you might have a reasonable point. But I didn’t, so you don’t.

      What I am suggesting is that there is likely to be a more effective way to manage conflicts of interest rather than respond to the knee-jerk instinct to ban.
      Whilst I disagree with you, I applaud you for the thought and time you are putting into this discussion as it is an important one.

   8. 

      Pro Consumer

      March 11, 2013

      Jamie,

      “I am told that 95% of people make up their own statistics”. Love it. (I heard it was more like 97%). Anyway – I’m stealing it :)

      I agree wholeheartedly that there are better ways of managing conflict than (poorly drafted) regulation or codification.

      The problem is that most of the ‘better ways’ ignore the ‘human condition’ – frailty, incompetence, disinterest, avarice, drug dependency, embezzlement, gambling addictions, insufficient data, insufficient time etc etc.

      Moreover – how does the Consumer tell the ‘real deal’ from the ‘window dressed’ con artist?

      I think we must acknowledge that conflicted remuneration is being received by otherwise well intentioned and ostensibly decent human beings – but the ‘best interests’ test is often missing or being poorly applied.

      At this point I have to confess that I’m probably doing a better job of “problem spotting” than “problem solving”.

      I concur with you that it is an important issue that needs further debate (and introspection). But its a difficult debate to have when so much vested (dare I say ‘conflicted’) interest is at stake.

      Cheers.

      Oh – I nearly forgot. Of course no one can have a finite count of those not ‘licensed’ or ‘registered’ to give Credit Advice but who are nonetheless doing so. But I’ll leave you to ponder this. The Banks have literally hundreds of well dressed and well remunerated BDMs targeting unlicensed (for Credit Advice purposes) Professionals to win their “mere referral” business. The significant majority are straying into advice and are receiving kick-backs from the Banks.

      A big investment by the Banks to garner ‘mere referrals’ – so one assumes its paying off. I tend to adopt the “Watergate theory” – if something doesn’t make sense – follow the money.

3. 

   Leadership Free Zone

   February 22, 2013

   IPA equivalent in FP is AOIFP. Enough said.

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