Ten professional associations are still anxious about issues embedded in Minister for Financial Services Stephen Jones’ determination that introduces eight new ethical obligations for tax advisers into law.
This anxiety is understandable because what is happening is ethical principles are being added to what is black letter law and that anxiety is mixed with annoyance because the government has tagged this determination as being a “response to PwC”.
Think about what this does in the first instance when a government wants to reform aspects of professional services regulation at the outset.
Jones and his colleagues cannot expect small to medium sized firms and the advisers that work for them to welcome or take ownership of new regulation if the government’s marketing spin is targeted at a large, big four accounting firm.
Small to medium advisory practices do not have the same scope of activity as the big four accounting firms, and Professional Planner has spoken with individual advisers on the condition of anonymity that are aggrieved at what they perceive to be collective punishment for minnows in the professional services sector for the sins of a whale.
Transpose onto that determination what appears to be a ceaseless number of inquiries, reviews, consultations on new legislation, and law being passed, and you can understand why a financial adviser, tax agent or accountant feels under siege with many of the small fry not having anything to do with a global accounting behemoth.
It is also a part of the reason why the government is getting resistance from the professional bodies such as the Financial Advice Association, and why Jones is trying to give his Labor colleagues in the Senate something to work with when Coalition Senator Dean Smith moves a disallowance motion next week.
A successful disallowance would in some respects allow for a natural circuit breaker to deal with the vague language professionals are stressing over.
Section 45 of the determination requires advisers to tell clients about things that may “significantly influence” a decision to engage them and Section 15 – the famous client dob in provision – uses the term “material”.
These are troublesome terms and having clearer, more precise language would allow professionals to know exactly what they must tell current or prospective clients, for example, and it would also assist the Tax Practitioners’ Board to enforce the determination.
The TPB is working on guidance, but its guidance cannot make up for what the technical gurus will see as sloppy wording in the original law.
More specific, refined language will help professional associations enforce their own rules and ethical standards.
What are people in charge of disciplinary investigations to make of words such as ‘significant’ and ‘material’ in the context of vexatious complaints from members of the public, for example, that dislike an aspect of advice given to them by an adviser?
Loose wording can make it a challenge for disciplinary committees to come to a view on whether a member has breached requirements of the determination, and more clarity on this will assist professional bodies to do their job.
Jones will need to bring firm ideas about how to fix aspects of the determination to the satisfaction of the professional associations being held later this week.
Any failure to deliver on clearer wording in the determination could result in a fiery Senate debate before the chamber votes on a disallowance motion on 10 September.
