Are you aware that new laws obliging financial planners that are tax agents to dob in a practitioner they believe has done the wrong thing have recently passed Federal Parliament?

Provisions requiring tax agents including those that are financial planners were proposed by the Australian Greens in the wake of the PwC tax policy confidentiality breach, but those proposals were not accompanied by an explanatory memorandum offering you and other practitioners some guidance on what you might be expected to do.

An explanatory memorandum is what usually accompanies legislation going through parliament so those making laws – and those seeking to understand laws that are being made – are not clueless about its intent.

The Greens amendments tabled by Senator Barbara Pocock dealt principally with two key themes: restrictions on the appointments to the TPB and dobbing in other people accused of misconduct.

There has been intense debate about the perceived conflicts of interest that exist when the regulator has former partners with some continuing financial interests on a board and the amendment attempts to deal with that issue.

The TPB as a regulatory body for the tax and BAS agents, the Greens argued, needs to be perceived to be independent and beyond reproach, and the government agreed with the proposed change.

“The Greens amendment will ban any senior executives or partners currently working at a tax firm with more than 100 employees, or with ongoing financial links to large tax firms, from being members of the Tax Practitioners Board,” Pocock said in Senate.

“Through this amendment, we’re fixing the loophole that allows big consultants to regulate themselves.”

Note that the focus of this amendment is the bigger end of town and there is no acknowledgement that this amendment’s impact extends beyond the Big Four firm’s tax divisions because there are different types of tax agents especially the registered agents that are financial planners.

It is an open question as to whether a board membership amendment was actually required because the minister responsible could request a proper check of an individual’s credentials before they were appointed to ensure that no conflict – real or perceived – exists.

Is the fact such an amendment was deemed necessary a vote of no confidence in the Treasury and Treasury ministers’ collective capability to do an appropriate review of a person’s background to ensure there are no perceived conflicts of interest?

How many financial planners holding tax agent status appointments the amendment could affect is unclear but what is clear is the mandatory reporting rules should be of great concern.

The legislation requires a financial planner who is a tax agent to ensure they report themselves when they have breached the Code of Professional Conduct.

It also requires registered agents to dob in a fellow practitioner if they have reasonable grounds to believe that the other person has breached the code in the tax agent laws, and that the breach is a significant one.