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Despite concerns about an inherent bias, Future of Financial Advice (FOFA) reforms will sufficiently protect accountants’ independence under authorised representative licensing arrangements, says the Institute of Public Accountants.
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IPA dismisses licensing claims
01 May 2014
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Speaking to AccountantsDaily, IPA's executive general manager for public affairs, Vicki Stylianou, dismissed concerns that institutional licensees could influence where accountants operating under an authorised representative arrangement direct their clients to invest.
Ms Stylianou said the FOFA reforms will ensure continued independence of advice after the accountants’ exemption expires on 1 July 2016.
“I know there are a lot of differences in opinion out there and some people say that there is an inherent bias or there are incentives or whatever, but the whole point of FOFA is to get rid of the conflicted remuneration,” she said.
“If you are doing a fee for service, then the whole idea is that you can give that independent advice - it’s the whole idea of FOFA.”
Ms Stylianou’s comments came in response to claims made to AccountantsDaily by John McIlroy, executive director of independent financial services firm Crystal Wealth Partners.
Mr McIlroy said many accountants were too independent to align themselves with an institutional licensee.
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“[Institutional licensees] are kidding themselves if they think fiercely independent accountants are going to sign up in droves to an institutional licensing offer which then directs where their clients invest,” he said.
“To think they are going to go and get licensed to an institution who then restricts what they can advise about and also what products they can recommend to their client, I think they’re kidding themselves - a lot of accountants just won’t do it.”
However, Ms Stylianou said that the days of institutional licensees' only pushing their own products through their representatives are over.
“I think this idea of you can only sell products that are made by your licensee, that are produced by your licensee is a bit of a myth in some ways,” she said.
“We have partnered with [AMP-owned] SMSF Advice, and if you look at their approved product list there is stuff on there that’s being manufactured by all the banks and a lot of different institutions, so it’s not just their products,” she said.
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