At long last, a major player in the financial advice industry has put its hand up and said enough is enough.
The conflicts and scandals in financial planning, which have robbed tens of thousands of people of their life savings, are well documented.
Quite simply, it is an industry that cannot be trusted, and Australians know that.
Now accounting body CPA Australia is trying to win back that trust.
It has announced plans to set up a financial planning subsidiary where, in its words, there will be “no commissions, no hidden incentives, no asset-based fees – just pure and transparent fee-for-service”.
It sounds great, and if CPA Australia carries through with its objectives, it will be.
But people in the industry who are already committed to those objectives are sneering, and here is why.
Three years ago, the Accounting Professional and Ethical Standards Board proposed a new standard for accountant financial planners which would have banned all conflicts of interest.
Under APES 230, as it was known, there would have been no commissions, no hidden incentives, no asset based fees – just pure and transparent fee-for-service. (Feel like you have already read this?)
CPA Australia teamed up with the Institute of Chartered Accountants to have APESB 230 watered down.
They rolled their own standards-setting board to ensure conflicted payments stayed.
So, when CPA Australia chief executive Alex Malley said as he announced his organisation’s new financial planning venture, “too many everyday Australians have suffered as a result of poor financial advice driven by conflicts of interest”, eyebrows were raised.
None more so that Bob Sendt’s.
Mr Sendt is a fellow of CPA Australia but was a member of the Accounting Professional and Ethical Standards Board when it was rolled by CPA Australia and the Institute of Chartered Accountants.
On hearing of CPA Australia’s latest move, he posted this message on his LinkedIn page: “Interesting that CPA are now adopting pure fee-for-service. Only a few years ago they were monstering the Accounting Professional and Ethical Standards Board for daring to suggest that such a fee structure should be mandatory for all members.”
Mr Sendt resigned from the APESB in protest.
CPA Australia, as well as the Institute of Chartered Accountants, could have got rid of the conflicts of interest three years ago.
They chose not to.
It was a position which for many shattered both organisations’ reputations for upholding genuinely professional standards.
But, better late than never.
CPA Australia says its new financial planning business is a “game changer for financial advice in this country”.
It will be and others will have to catch up.