Michelle Levy flags concerns about accountants’ advice proposal

Speaking on a panel discussion on the Quality of Advice Review, BT head of financial literacy and advocacy Bryan Ashenden noted that a number of the accounting bodies have made submissions calling for legislative changes to enable accountants to be able to provide certain types of strategic advice — including SMSF advice.

“The IPA submission talked about how the limited licensing regime was badly designed from the start and required a lot of accountants to [meet new requirements] with arguably with not a lot in return,” explained Mr Ashenden.

“I note that the IPA, together with Chartered Accountants ANZ and the SMSF Association have made a separate submission in relation to the limited licensing rate and gave an overview of a potential model that could replace it.”

IPA group executive, advocacy and policy, Vicki Stylianou explained that under the proposal, accountants with certain qualifications could be taken out of the financial advice regime and put in the tax regime under the Tax Agent Services Act.

“[It would mean] that where you’ve got [a] professional practice certificate and everything that involves, and you’ve done additional qualifications in superannuation and SMSFs, then you would be able to give advice to your clients in the ordinary course of your tax agent services in terms of setting up an SMSF and advising a client to set-up, winding funds up, pensions, and contributions,” she explained.

“Essentially, we would be redefining what a tax agent service is under section 90-5 of the Tax Agent Services Act to say that, if you give this type of advice in these circumstances.”

Commenting on the proposal, Allens partner and the independent reviewer appointed to lead the Quality of Advice Review, Michelle Levy, said she had concerns about creating exceptions for particular professionals within the advice regime.

“I have the concluded view that I don’t like exceptions. I think they are inconsistent with a principles-based approach, which is what I am preferring,” Ms Levy stated.

“I worry about creating exceptions, and I think there needs to be a very compelling reason to do that.”

Ms Levy was also questioned on whether she would consider separating strategic advice from product advice and allowing advisers to provide advice with reduced compliance requirements where the advice is solely focused on strategy.

Mr Ashenden explained that one of the key concerns for financial advisers was separating strategy from product.

“As an example, if I want to talk about superannuation then am I starting to talk about a class or product and therefore, I will be captured under the licensed advice regime? If I’m talking about an SMSF, it may be a product that doesn’t even exist yet because the fund hasn’t been set up.”

Some advisers and industry groups have raised the idea of uncoupling the strategic advice from product advice and allowing that advice to be delivered with less disclaimers and shorter statements of advice.

Ms Levy said she wasn’t sure that segmenting advice into different types would be helpful.

“Rather than segmenting, in my view, the regime needs to be broader, not narrower. The way I think about this is that it should be easier to give financial advice whether that includes strategic advice, product recommendations or credit advice,” said Mr Levy.

“It seems to me to be a very bizarre world where you can speak about credit under one regime and superannuation interest under a separate regime.

“My hope is that my recommendations deal with that as a whole. In my view, what is required by the adviser should adjust according to what you are specifically advising on. If we move to a more principles-based regime, then I think that it's easier for the law to respond and puts the responsibility on the industry. The question is to what extent the industry is ready for a more principles-based approach.”

“I don’t think there should be a different regime for strategy advice from a product recommendation.”