Tax advisers held to higher standard with client data

Registered tax advisers are held to a higher standard than other financial planners when disclosing clients’ information to third parties, with the Tax Practitioners Board’s (TPB) Code of Conduct imposing more stringent requirements even than the Privacy Act.

According to the Fold Legal associate, Chris Deeble, this difference came down to registered tax (financial) advisers holding highly confidential information for their clients, with the rigorous disclosure obligations in the TPB Code recognising that their clients had a strong interest in ensuring their information remained confidential.

Deeble believed that financial advisers broadly could benefit from considering the Code’s standards, however: “The TPB Code standard is helpful for any professionals who hold personal, legal or financial information for their clients,” he said.

“If you’re a registered tax (financial) adviser or hold confidential client information, it’s a good idea to review your disclosure and consent processes and documents to make sure you meet your obligations.”

The difference between the Code and the laxer privacy legislation were threefold. To start, the TPB Code extended to cover all client information for example, whereas the Privacy Act extended only to personal information.

Privacy law also only required a client’s consent if advisers were disclosing secondary information or personal information for a secondary purpose, while the Code required it for any disclosure to third parties. What could qualify as a third party was extensive – storing client data in the cloud, or entering client contact details into MailChimp, would both require disclosure under the Code.

Finally, the TPB Code also required that clients actively consent to the disclosure of their information. The Privacy Act, in contrast, only required that advisers notify their clients on how their information would be used, with implied consent even proving permissible in some situations.

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