Vulnerable to ‘tainted’ financial advice
Australia’s peak seniors advocate, COTA Australia, is worried older people will continue to be given poor or tainted financial advice by accountants if the Accounting Professional and Ethical Standards Board (APESB) caves in to sections of the industry wedded to commissions based practices.
Australia’s peak seniors advocate, COTA Australia, is worried older people will continue to be given poor or tainted financial advice by accountants if the Accounting Professional and Ethical Standards Board (APESB) caves in to sections of the industry wedded to commissions based practices.
The APESB met recently to consider new professional standards for accountants. The Board had recommended a ban on all forms of commissions on financial products but it appears this may now be considerably watered down.
COTA Australia chief executive, Ian Yates, said the Board was reportedly about to do a back flip and allow accountants to continue to accept commissions and third party payments as long as they disclose this to clients – but the clients will have not have a choice of method of payment.
“The Board seems to be caving in to the pressure of some self interested professionals who would prefer to get rich from commissions rather than operate with integrity, objectivity and due care,” Mr Yates said.
“The Storm Financial, West Point and other financial collapses highlight just how vulnerable sections of our community are to the quality of financial advice offered to them by industry professionals.
“No Australian should suffer the indignity and hardship of losing the proceeds from a lifetime of hard work due to conflicted payments such as third party commissions and soft payments.
“The loopholes in the amended new standards falls short of the high standard of behaviour the Board originally proposed for the accounting professional, retaining the danger of unethical conduct by advisers channelling investors into products for which they receive a commission.
“The backdown leaves the industry open to ongoing questions about conflicted payment that client disclosure recommendations can never alay, as the Board itself admitted in its original recommendations.
“Older Australians are particularly exposed when signing financial documents which they may not fully understand, thus making decisions that may place their financial future at risk, with virtually no chance of re‐couping lost assets.
“The new standards have been five years in the drafting; the Board has a vital opportunity to ensure they do not fail at the last hurdle.
“Older Australians, vulnerable social groups and the Accounting Profession would be best served if the Board met community expectations by insisting that accountants ban all commissions and third party payments,” he said.
