Merry Christmas to Peter Wilson. When it was suggested that Peter Wilson should be independent of the old board so that we can have a fresh start Peter responded with "That's your issue". Summary of the meeting here: viewtopic.php?f=23&t=594
A good summary of where we are up to by Joe Aston of the AFR, linked to from here: viewtopic.php?f=5&p=4137#p4137
If you are new to this website read the story so far: viewtopic.php?t=321#p1793
Check out some of the AFR articles, too many to list and check out some of the ABC reports: http://www.afr.com/business/accounting/ ... 215-h055ej http://www.afr.com/business/accounting/ ... 211-h02x1d http://www.abc.net.au/news/programs/the ... s,/8626662
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18 Feb 19 - ABC - Accting Profession on Financial Planning conflicts

Issues at CPA Australia needing investigation and/or review.
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JWheldon
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18 Feb 19 - ABC - Accting Profession on Financial Planning conflicts

Post by JWheldon » Fri Feb 22, 2019 7:55 pm

Accounting profession faces another moment of truth on financial planning conflicts
By business reporter Andrew Robertson
https://www.abc.net.au/news/2019-02-18/ ... n/10820526
You can generally tell how important we think something is by how much time we spend on it.

At its quarterly meeting today, the Accounting Professional and Ethical Standards Board has allowed just 15 minutes for what it calls, "update on the royal commission and impact on financial services."

Just a quarter of an hour for a royal commission report that will have far-reaching consequences for the financial services sector, including many accountants.

But the Accounting Professional and Ethical Standards Board has form in sidelining issues around the conflicted pay that some accountant financial planners accept.

On its website the APESB calls itself "independent". It's not.

The APESB is paid for by the lobby groups Chartered Accountants Australia & New Zealand, CPA Australia and the Institute of Public Accountants, and they call the shots.
Long history of ignoring conflicted remuneration

In 2012 the board tried to assert its independence when it issued a remuneration standard for those accountants who are also financial planners.

It was called APES 230.

The board had recognised that conflicted payments (such as commissions, percentages of funds under management, soft dollar benefits, and so on) were at the heart of all the financial planning scandals that have devastated the finances, and lives, of so many Australians.

Its conclusion: Accountant financial planners had to operate to the highest possible standard.

Advice was not about selling stuff for the adviser's benefit.

The conflicted payments had to go.

Or, in the APESB's words, "no safeguards exist that can reduce the threats (to clients) to an acceptable level."

In his royal commission report, Kenneth Hayne said this about conflicted remuneration: "Experience, (too often hard and bitter experience) shows that conflicts cannot be 'managed' by saying, Be Good. Do the right thing."

In other words, seven years after the Accounting Professional and Ethical Standards Board recognised that all conflicted payments should be scrapped, Mr Hayne is saying exactly the same thing.

So how did the accounting profession react to its standards board wanting the highest standards, wanting to put customers first, and wanting the conflicts gone?

All three of the accounting industry lobby groups, which pay the APESB's bills, rejected the proposed new standard.

A new, watered-down version, which kept the conflicted payments, was adopted, and there was a cleanout of the board.
Accountant financial planners passed on professionalism

The accounting profession had passed up an opportunity to show that it truly is professional, that it understood its fiduciary duty, that accountant financial planners really could be trusted to act in their customers' best interests.

On that last point, adopting APES 230 in its original form would have differentiated accountant financial planners from many in the financial planning industry and could have been a huge selling point.

"You can trust me, I'm an accountant financial planner," this sector could have advertised.

It would have been very hard for the rest of the financial planning industry to continue to justify its conflicted payments if accountant financial planners were leading from the front.

As the APESB said in 2012 about its consultation period leading up to the development of APES 230, "the consultation phase identified no significant barriers to implementing a fee-for-service approach".

Accountant financial planners, though, continue to show they're wedded to their conflicted payments, and the inherent risk that brings for customers.

As late as last year, when the watered-down APES 230 was reviewed, all three accounting groups lobbied for the conflicts to be kept.

Because of those conflicts, which pervade the industry, Mr Hayne said, "I do not believe the practice of giving financial advice is yet a profession

The question for accountants is are they a profession or not?

If they are, they know what they must do.

Adopt APES 230 in its original form and get rid of the conflicts that have blighted financial planning for too long and cost so many Australians so much.

For that, 15 minutes simply won't cut it.

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