As I have mentioned before in TaxVine, a Federal Government move to allow financial planners to provide tax advice fails to set appropriate tax and commercial law education requirements, thereby threatening critical consumer protections.
The Tax Institute is concerned that recent Government Regulations will allow relatively inexperienced financial advisers to gain registration under the Tax Agent Services Regime by simply joining a recognised financial adviser professional association.
The Government's actions result in there being no requirement for financial advisers to have completed a course in tax or commercial law, and yet the effect of this will be to allow them to provide wide-ranging tax advice.
This means that consumers will be at risk of receiving tax advice and services provided by adequately qualified advisers or those with out-of-date skills.
This is a particularly curious move by the Government, given the recent Senate Economics References Committee's investigation of a number of rogue financial advisers. The report found the activities of some advisers were ‘unethical, dishonest, well below professional standards and a grievous breach of their duties'.
Given that the report recommended imposing minimum education, experience and continuing professional development requirements on the financial advising industry at large, it is illogical that the Government is withdrawing some of these conditions for the provision of tax advice.
The law must ensure robust consumer protection. Recent financial planning scandals such as Storm Financial and Opes Prime, have highlighted the risk posed to people's life savings, their investments and indeed their livelihoods, as a result of poor consumer protection.
In effect, the Government's Regulations fail to meet the minimum educational standards consumers are entitled to expect.
The Australian Financial Review reported on our concerns in its 6 August 2014 edition. The article: Row over changes allowing financial planners to advise on tax, may be accessed here.
You can read more about this issue in our submission to Treasury on the draft version of these Regulations. The Tax Institute is continuing to argue the case on this issue with key Parliamentary decision makers.
I would be pleased to provide further detail or to discuss this issue with members; please feel free to be in touch with me via email@example.com.
Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute.