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Accountants face tighter fee laws

Australian accountants who are financial planners face a new ethics standard designed to prevent cases of inappropriate financial advice driven by conflicts of interest.

The draft requirements issued by the Accounting Professional & Ethical Standards Board (APESB) ban all remuneration practices based on product sales or the accumulation of funds under management, including commissions, percentage-based asset fees and production bonuses.

Under APES 230 Financial Advisory Services, members of Australia’s three professional accounting bodies who are financial planners could only charge clients on a legitimate fee for service basis.

The Australian government recently proposed laws that would ban percentage-based asset fees when clients use gearing strategies to invest.

But the APESB has gone a step further by proposing to prohibit percentage-based asset fees regardless of gearing.

APES 230 would supersede the existing APS 12 Statement of Financial Advisory Standards.

Comments on the exposure draft are due by 15 September and the final standard is expected to be effective from 1 July 2011.

CPA Australia has said it supports the intent and principles of APES 230, but is concerned about the 1 July start date.

“We understand the potential impact the proposed standard will have on members and during the drafting process of APES 230 consistently highlighted the need for appropriate transition provisions and a considered start date,” CPA Australia said in a statement.

“We are disappointed that this has failed to be reflected in the released [exposure draft].

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