Minister for Financial Services Stephen Jones’ determination imposing eight new ethical obligations on tax and financial advisers is not out of the parliamentary woods yet following the announcement of a new motion of disallowance.
A new notice of motion to disallow the ethical rules was lodged by independent Senator David Pocock – a key vote that ensured the first attempt to axe the Tax Agent Services (Code of Professional Conduct) Determination 2024 failed in the Senate.
Pocock’s motion to debate disallowance has been countersigned by Coalition Senator Dean Smith.
Smith was responsible for the first attempt to disallow the determination on 10 September because professional associations such as the Financial Advice Association argued that insufficient consultation had taken place on the document.
The absence of proper consultation meant the associations were unable to explain how the final wording first published online by Jones on 2 July would force tax agents to make disclosures that were either unjust or pre-empted regulatory outcomes.
Interpretations of the wording issued by Jones then included that new disclosure rules would require an adviser to disclose investigations into their conduct that were incomplete, and therefore depriving them of natural justice.
There were also fears repeatedly dismissed by Jones and the Tax Practitioners’ Board that an adviser would have to disclose mental health issues as a part of a requirement to tell new or existing clients about things that might influence picking an adviser to handle tax affairs.
On the day of the attempted disallowance, Jones undertook to make amendments to the determination in consultation with the 10 associations that had been campaigning heavily against the structure of the new rules.
That resulted in a tied vote in the Senate with the attempt to axe Jones’ eight new ethical obligations being thwarted by a 31-31 draw on the Senate floor.
Pocock told the Senate on 10 September that he was concerned about the absence of consultation with the professional associations, but that he would not vote for the disallowance on the day because he felt the government should be given the opportunity to work through the issues with the professions to fix the problems.
“I thank Senator Smith for lodging this disallowance, and I share the concerns that industry reps have raised around the poor process and consultation,” Pocock told the chamber prior to the first disallowance vote.
“However, I also recognise that there has recently been good-faith engagement from the government, and they’ve come to an agreement with industry bodies to work through the remaining outstanding issues.
“I believe the government should have the opportunity to deliver on this. Should they not, I’d be very happy to support a disallowance, but at this stage I won’t be.”
The second notice of motion is due to be moved on 8 October, and it has been timed to ensure that the determination could be disallowed if the government failed to meet its promise to consult professional associations and make amendments.
Jones told a press conference on 11 September – the day after the first disallowance motion failed on the Senate floor – that discussions in the lead up to that vote were “productive, good-faith discussions”.
“I’m glad the disallowance motion was seen off because, frankly, I’m more motivated by ensuring that we work with the accounting profession to ensure we get an uplift in professional standards and protection for consumers who have tax services,” Jones said.
“But let’s not forget why we embarked on this journey. Two years ago Australians were scandalised when they learned that inside PwC, the greatest corporate scandals of the last few decades has been exposed, and it put a spotlight on the fact that our laws and our penalties, and our disciplinary procedures for the tax profession were not up to scratch. And the government was determined to ensure that they are.”
