The financial advice sector would be being singled out for different treatment to other professional sectors if the Tax Practitioners Board (TPB) moved to force specific client approval for tax advisers to move them to a new adviser.
That was the assessment of the Association of Financial Advisers (AFA) in a submission responding to a TPB practice note dealing with proposed changes covering the transfer of business including a letter of engagement.
“We are not aware of any other profession (doctors, lawyers, accountants, dentists, physiotherapists, chiropractors etc) that requires positive client consent as part of the sale or transfer of a business,” the AFA submission said. “Moving to a model of positive and specific consent from each client would have a very material impact upon the financial advice profession and put at risk the clients of financial advisers.”
The AFA also pointed out that the TPB’s proposal was being put forward at the same time as a large number of financial advisers were being forced to change licensees and when a substantial number were considering their intention to remain in the financial advice profession.
The AFA submission said that the proposal from the TPB along with the Letter of Engagement proposal was likely to have a further material negative impact upon the viability of the financial advice sector.
“It will also likely serve as an additional impost on clients who are already required to complete a raft of declarations and red tape, and possibly discourage them from continuing their advice relationship,” it said.
“To put it plainly, there are many financial advisers across Australia who are currently struggling and in elevated states of distress and anxiety. This proposal, and the likely consequences in terms of the valuation of financial advice businesses will add to the mental health issues that are now impacting the financial advice profession,” the AFA submission said.
“In our view, what has been proposed is excessive and is being proposed at the worst possible time for the financial advice sector.”