Last week saw CPA Australia announce the establishment of CPA Australia Advice Pty Ltd.
This wholly owned subsidiary of CPA Australia will apply for an Australian Financial Services Licence (AFSL) with the intention of effectively providing dealer services to interested members of the association (you have to be a CPA to operate under the new licence).
It’s not entirely clear to me whether the business will also employ financial planners and therefore provide advice itself but given the impact they plan to have on the standards of financial advice in Australia, one would have to assume it’s part of the plan.
Responses to this announcement have predictably fallen into two camps.
On the positive side will be all those members who have been waiting and hoping that their professional association will solve their licencing problem. They know they need to do “something” if they want to continue helping their SMSF clients in the future. So far they either haven’t found an external solution that suits them or haven’t found the time to actually do anything at all yet. They will be breathing a sigh of relief. Of course, that glow of satisfaction may dim once they discover exactly how many hoops their association plans to put them through before they start providing advice. Given that CPA Australian plans to raise the bar in terms of financial advice, one can only assume that it will be higher than these same accountants would face at another licensee.
On the negative side are those who have either already found a solution (often incurring significant hard and soft costs) or those who already provide such a solution themselves and now see their professional body competing with them. One tweet I received was very clear on this – “pay a member fee to [support someone to] compete against you”.
It raises the question – what exactly IS the role of a professional association?
To my mind their responsibility first and foremost is to set and maintain professional standards and monitor members against them. These might range from practical standards (these policies have to be followed for this particular type of work) or ethical (say by stipulating a code of conduct). They should also take into account whatever statutory function that profession fills. For example, members of my institute (the Actuaries Institute) are allotted very specific functions under insurance and superannuation legislation. It’s important that my institute regulates its members in such a way that the Government and community can be confident that their faith in giving us those responsibilities is not misplaced. Auditors have a similar role.
So how far should professional bodies go beyond this?
They play a significant part in interacting with the regulator, government and other groups. That’s valuable and important work – I expect there would be little objection to them carrying out that function. (Although an interesting aside for regulators and government, in my view, is that they presumably choose to rely on professional bodies because that gives them a conveniently grouped set of people with whom to work. Trying to talk to “industry” generally would be like herding cats. But I wonder if it would result in better advice sometimes? There’s no substitute for talking to the people on the ground if you want to consult with industry. It’s often said that professional bodies are better representatives because they are unbiased and independent. That assumes that the profit motive is the ONLY thing that introduces bias – a discussion for another day.)
But what next? Professional bodies routinely get involved in education. Their argument is that this supports their members in maintaining their professional standards. Of course the opposing argument from educators like Heffron is that we are simply paying membership fees to an organisation that then competes with us. Naturally their training is at much lower prices than ours. I don’t buy the argument that as a not for profit they are not commercial organisations – of course they are! Revenue from conferences, training etc allows them to fund their existence and keep their membership fees low and compete with each other for members. That’s a good thing if you’re a member – as long as you’re not a member with a training business!
This latest announcement from CPA Australia is effectively yet another foray into that commercial space. Now, they are competing with their members who operate dealer groups. What next? Will they perhaps set up a low cost processing service to support their members who run SMSF administration businesses and are nervous about outsourcing? Or maybe start providing all the document templates that accounting practices typically need? Or get into software development?
How far do you want YOUR professional association to go?