TPB consultation could be disastrous for planners

3rd March 2020

The Tax Practitioners’ Board’s consultation on their ongoing training requirements (particularly those for financial planners) has been welcomed by the planning industry as a sign that sanity is being restored to regulation. Unfortunately, the TPB’s approach could just as easily end up massively increasing planners’ training obligations, not reducing them.

In this week’s Industry Insights, we look at how the TPB and the Financial Adviser Standards and Ethics Authority (FASEA) separately regulate ongoing training requirements, and whether the TPB’s paper presages good or bad change for financial planners.

How did we get here?

Following a stoush on legal semantics after tax agent law was federalised in 2009, financial planners found themselves in a unique position amongst professionals, and it was not an enviable one. Financial planners now had two separate regulators to whom they were directly answerable, ASIC (latterly assisted by FASEA) and the TPB.

Rather than taking the logical approach and choosing to streamline the two sets of regulatory requirements through one of the regulatory bodies, both retained their full powers (although this has been under review). With this came overlapping obligations for financial planners – a major one being continuing education requirements.

As it stands, most planners are required to complete 40 hours of Continuing Professional Development (CPD) under the policies of FASEA as well as 60 hours every three years under the TPB’s Continuing Professional Education (CPE) policy. The saving grace of this over-supervision is that the TPB’s CPE policy for financial planners, or tax (financial) advisers in the TPB’s own language, has been quite broad, and one hour of CPD can often count towards both CPD and CPE requirements.

The TPB’s consultation paper, and the press campaign that accompanied it, made it appear that the TPB and FASEA were going to finally sing from the same hymn sheet when it comes to ongoing training. Unfortunately, a detailed reading of the paper reveals that, while a streamlined approach is one potential outcome, a massive blow-out in annual training hours seems equally as likely.

The proposed TPB reforms

As mentioned above, the current TPB policy is that tax (financial) advisers are required to do a minimum of 7 hours of CPE per year with 60 hours completed every three years. This is effectively a 20 hour per year requirement.

In its consultation paper, the TPB has proposed to increase this requirement to 40 hours per year to align with the requirements of the Financial Adviser Standards and Ethics Authority (FASEA).

Immediately obvious is that a 40 hour per year requirement could be an issue for those part-time planners permitted by FASEA to complete only 36 hours. That said, the TPB do ask for feedback in relation to this issue in the consultation paper.

Aligning TPB and FASEA requirements

In the consultation paper, the TPB acknowledges recommendations it has received that compliance with FASEA’s CPD requirements should be sufficient for the TPB’s CPE requirements as well.

That said, the TPB’s proposed position is that they state that a tax (financial) adviser is “likely” to meet the TPB’s CPE requirements if they meet FASEA’s CPD requirements, however any FASEA CPD activities must be able to be demonstrably linked to the planner’s tax (financial) advice services.

Not the solution it seems

This TPB proposal, in conjunction with the proposal to increase CPE to 40 hours per year, could cause major issues. If the TPB insists that all FASEA CPD needs to be related to providing tax (financial) adviser services in order to meet CPE requirements, advisers are going to be left well short of their 40 hour obligation.

In many cases, much of an adviser’s FASEA CPD activities will not relate to providing tax (financial) adviser services. In the technical competence CPD area, training on topics such as aged care, social security and some investments may contain no tax component. Furthermore, it is easy to see how CPD in the areas of client care and practice, regulatory compliance and consumer protection, professionalism and ethics, and in FASEA’s general category may not be viewed as directly related to providing tax (financial) adviser services.

The TPB’s unwillingness to completely cede training oversight to FASEA could see planners undertaking annual ongoing training of well over 40 hours.

Other consultation points worth considering
Renewal dates

The TPB has raised a consultation question over when a financial (tax) adviser’s CPE year should commence. The TPB proposes that it could be the anniversary of the adviser’s registration with the TPB, or January 1 each year.

From the point of view of financial advisers, perfect alignment with the FASEA training year would seem the most suitable.

CPE logs

The consultation paper proposes that the TPB require tax (financial) advisers to be able to better demonstrate how their CPE relates to their tax adviser activities. This includes more detailed record-keeping on each adviser’s CPE log.

Record keeping

The TPB also proposes to increase record-keeping requirements from 6 years to 7 years to align with FASEA’s requirements.

Where’s my advocacy?

While regulatory reform overload has left many in the financial planning industry jaded and apathetic towards further changes, strong push back to the TPB’s proposed position in this consultation paper is essential. While the alphabet soup of Australia’s financial planning associations and peak bodies will no doubt make their submissions, a meaningful response from individual planners registered with the TPB would have a greater effect.

The TPB is accepting submission until March 18. It is worth asking your dealer group whether they plan to engage in the consultation – or to do so yourself using the link at the start of this article. The TPB states that a final position will only be reached after consideration of submissions – the industry can give the TPB some well-constructed opinions to consider.

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