TPB professional pathway removal creates ‘significant challenges’: FAAA

In its submission to Treasury on the review of eligibility requirements for registration with the Tax Practitioners Board (TPB) consultation paper, the Financial Advice Association Australia (FAAA) argued against the proposal to remove the professional association accreditation and registration pathway.

While the FAAA noted that most financial advisers are registered as Qualified Tax Relevant Providers (QTRP) with the Australian Securities and Investments Commission (ASIC), there are still members who are registered tax agents.

“For our members who hold TPB registration, the proposed changes to the registration may present significant challenges,” it said.

Under the current regime, the Tax Agent Services Act provides a pathway for professional associations to be accredited as a recognised professional association (RPA).

“Once an association satisfies the TPB that these requirements set out in the TASR have been met and the association becomes an RPA, its voting members are able to apply for tax practitioner registration utilising a specialised registration pathway,” the consultation paper said.

However, the paper added the TPB has “limited regulatory tools” available if an RPA is not complying with its obligations under the regimes.

Additionally, while RPAs need to have “adequate disciplinary procedures”, the consultation paper noted that there is “no requirement for RPAs to report member wrongdoing to the TPB”.

“This may result in a gap in the ‘co-regulatory’ framework. Under the RPA framework, the TPB is reliant on the RPA to adequately regulate their members,” it said.

“However, a perceived conflict arises where professional associations may be perceived to balance the expectations to act in the interests of their members, while adequately regulating (and disciplining where required) those members. It may not be possible to appropriately or adequately manage this perceived conflict in some circumstances.”

The FAAA refuted this claim, adding that it does not “accept that there is a fundamental problem with the conflicts of interest that are created by the recognition of professional associations”.

“The FAAA’s professional conduct and complaints function is ‘ring-fenced’ from other association roles,” it said in its submission.

“Established under the FAAA conduct and integrity regulations, our disciplinary process was put in place as a formal mechanism to investigate complaints and other reports of misconduct against FAAA members. Decisions about whether an FAAA member has breached the FAAA Code and whether they should be sanctioned, are made by an independent Conduct Review Commission (CRC).”

Acting against misconduct, the FAAA added, is “central” to a professional association achieving its purpose to “act in the public interest, uphold the reputation of the profession, and represent the interests of its members”.

“In contrast to the assertions made in the consultation paper, professional associations embraced their disciplinary responsibilities of upholding professional standards. It is not in the interest of professional associations, their members, the profession as a whole, or the public to fail to uphold the professional standards they set,” it said.

The FAAA also argued against the limited time frame available for consultation on the proposals.

“As registration is mandatory to practice, the short consultation period for these proposals is concerning. We would be supportive of further workshop style consultation meetings to ensure an informed and sensible outcome is achieved,” it said.

In its submission, the SMSF Association also noted the “truncated timeline” for the consultation, which originally allowed only 22 days to consider the complex policy reforms, though this was eventually extended by a week.

“We therefore urge Treasury to further engage and consult with stakeholders on the matters raised in the consultation paper before the government considers any regulatory reform. This will be essential in ensuring that any changes considered are effective in addressing identified problems and avoid the risk of unintended consequences,” the SMSF Association said.

Additionally, it noted that the changes would have significant regulatory and cost impacts on both current and prospective tax practitioners.

“They do not clearly demonstrate the public policy problem that necessitates reform. They also fail to clearly articulate their objectives and lack consideration for other interrelated issues and measures,” the SMSFA stated.

“We are also unsure why regulation appears to be the default option, without considering what other non-regulatory options may also be effective, such as new or updated guidance from the regulator, being the Tax Practitioners Board.”