Date issued: 15 August 2006

Moves to simplify the provision of financial planning advice to consumers were welcomed today by Australia’s largest professional body, CPA Australia.

CPA Australia CEO Mr Geoff Rankin said the Simpler Regulatory System Bill to be introduced into Parliament would address some of the barriers to consumers receiving timely, appropriate and cost-effective financial advice.

'Our members have reported saving a considerable amount of time as a result of the 2005 FSR refinements. They welcome the pruning back of some of the requirements which will mean less compliance for financial planners and reduced costs for consumer financial advice. This means lower fees to the client, who in turn has more to invest. So it’s a win-win situation for members and clients,' Mr Rankin said.

He is looking forward to further consultations on several issues identified by the Pearce report so that these can be ironed out before the end of the year.

'CPA Australia has long been an advocate of an exemption for a Statement of Advice for pro bono advice that does not relate to financial products,' he said.

'In circumstances where personal advice is given, but no financial product is recommended, and no remuneration is received for this advice, we would recommend that a statement of advice does not need to be prepared but streamlining of training requirements will be necessary under ASIC’s Policy statement 146,' he said.

'In certain one-off situations, a planner may be in a position to provide some guidance or advice to a consumer, but may refuse to do so because of the expense and onerous requirements for a full statement of advice. This common sense solution would allow more consumers to receive relevant professional advice.'

Mr Rankin noted that among the raft of corporate governance and company reporting measures, that the current business judgment rule was subject to separate consultations. He said that the current judgment rule defence appropriately balances directors’ duties with the interests of company stakeholders including investors. Extending the defence would have far reaching implications and clearly warrants more detailed consideration.

With regard to thresholds, CPA Australia wants to see a significant increase in the current thresholds that apply for financial reporting of large proprietary companies included in the forthcoming policy consultation paper.

'Any threshold will become meaningless over time, so redefining of the thresholds must enable regular indexation, review and amendment,' Mr Rankin said.

CPA Australia would also like to see comment sought on the introduction of thresholds for the financial reporting of clubs and associations that are public companies.

'These thresholds would improve the financial reporting obligations that apply to these organisations and encourage alignment between these and the obligations of incorporated clubs and associations under state law," Mr Rankin said.

'CPA Australia looks forward to continued involvement in the next phase of consultation,' he said.

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