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The role of accountants in addressing the financial advice shortage remains largely ignored in the government's response to the original TPB review, the association says.
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Regulatory settings hampering integrated tax and financial advice: IFPA
13 August 2024
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The Institute of Financial Professionals Australia has told Treasury that the current financial advice system remains "unfit for purpose" in its response to a recent consultation relating to the Tax Practitioners Board registration review.
While the consultation paper explores a number of the recommendations from the 2019 review of the TPB, the IFPA noted that the government continues to ignore the issue of the accountants' exemption which was one of the issues raised in the review.
The TPB review recommended that the government initiate a specific review of what advice accountants can and cannot give concerning superannuation and which accountants might apply to.
Up until 30 June 2016, accountants were able to provide a range of services to SMSFs under the accountants’ exemption in Regulation 7.1.29A of the Corporations Regulations 2001. This was removed as part of the Future of Financial Advice reforms from 1 July 2016, with accountants subject to much stricter rules relating to the provision of financial advice since then.
In a recent submission, the IFPA said the current financial advice system "overlooks how well integrated financial tax practices dovetail with superannuation advice practices".
"Tax advice often intersects with superannuation and SMSFs, which are legitimate ways to manage one's tax affairs," it said.
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The association said while the government's Quality of Advice Review is a step in the right direction to reduce the red tape involved in providing financial advice to Australians, it failed to address the role accountants could play in helping provide financial advice to a greater number of Australians and the issues with the current limited Australian financial services licensing regime.
"There is a significant demand for integrated taxation and financial advice, but the regulatory burden restricts the supply of financial planners, leaving only 15,000 practitioners to serve the entire country," it said.
"Many superannuation fund members and SMSF trustees are not able to access good affordable financial advice when they need it."
The submission also warned the government of the risk of over-regulating the industry and the cost of the regulatory regime on regulators, practices and their clients.
"Proposed changes could significantly increase compliance costs without any offsetting benefit to the public," it said.
The IFPA said removing the professional association accreditation and registration pathway, for example, would see the TPB incur substantially greater costs in regulating tax practitioners.
"These costs could then be passed through to practitioners via higher registration fees," the submission said.
"By closing off the professional association pathway, the regulator is suggesting that the bodies are not taking their CPE audit and/or governance requirements seriously, which is not true."
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