Why it's time for accountants to kick start their own RDR

I'm afraid you sum it up with the line: "Even if they spend years taking exams to become chartered they will still lose clients to unqualified accountants who can undercut them on price because they do not have to pay to be regulated."

This is just close-shop mentality.

Some well-qualified accountants think there should be barriers to entry because it costs they're being out-competed.

The reality of accountancy is that many financial problems - from filing tax returns to finalising accounts for smaller businesses do not need KPMG involved charging an arm and a leg. People benefit from competition - in terms of both price and service.

Certain activities on the other hand (e.g. audit) are however reserved for Chartered/Certified Accountants (who must also then hold the relevant audit license). And the existence/status of such Chartered people ensures a healthy supply of new graduates.

No.

People always say "IFAs should be more like accountants". The reality of accountancy is that it demonstrates why RDR has gone wrong. We should indeed be more like accountants - with a range of practitioners being available. And we all need to be suspicious of those accountants who need barriers of entry and restrictive practices to earn a living.

(Apologies. I'm particularly dyslexic today)

I agree with Man in Black. Every industry and profession faces price based competition. It is for accountants to demonstrate that higher fees translate to superior service and that the fees will be recouped through tax savings and improved efficiency. They will not be able to add value to all clients and those with basic needs will seek out basic accountants. Just as IFA's add most value to those whose affairs are more complex and the banks pick up the rest. Private Client solicitors face compeition from will writers etc but only where requirements are straightforward.

A good opportunity for accountants to offer a wider service by developing relationships with decent advisers.

It was recently reported that a local business went to the wall because their 'accountant' had been cooking the books etc. Surely this demonstrates the need for regulation of accountants.

With regards to cost and competition MIB and DavidCFP would you take you car to an unqualified mechanic because he was the cheapest?

Frankly I find it amazing that anyone can set up as an accountant without qualification.

Sound comments from MIB and David.

Ask yourself the question, how often do IFA's end up in competition with other real IFA's - rarely. It's only the banks muscling in on clients because they are seen historically as trusted professionals. The face of financial services is changing for the good, how many IFA's are ex-bankers disillusioned with banks impersonal services towards customers. What is needed is greater education of the public in all matters - it is still true, buyer beware!

Sean Kelly.

There is no strict qualification requirement or apprenticeship scheme for car mechanics.

Well you learn something new every day, so an accountant does not have to be qualified? I agree with the article, if we, as IFS'a or tied adviser have needed, since 1997, the full FPC and now require Diploma then why the hell should accountants be able to set up with no qualifications at all? To anyone whe objects well think of it this way; would you like to put your family into a taxi knowing that the driver has never passed a driving test?

Sorry, Man in Black, I could not disagree more with your comments.

I am totally supportive of 'Accountant' becoming a protected title for qualified and regulated professionals - and believe that others ,with an interest in protecting the public from charlatans, should support this current campaign (started incidentaly by the Institutes, rather than this network).

Currently anyone can set up a book-keeping service, call themselves an accountant, and take advantage of public perception of what theat means. They are neither qualified, nor regulated and this poses a threat to the public. You are right, however, that the audit remains a protected activity.

This is very distinct from a 'closed shop' - after all anyone can train to be a qualified (Chartered or Certified) Accountant in the same way that anyone is capable of becoming a QCA Level 4 adviser. The only barrier is the cost of exams and material; it is just that some individuals are keen to trade off the title without having adequate care or knowledge.

In the same way, I am concerned that pre- and post-RDR Financial Advisers can continue to purport to offer the same services and that qualifications will count for nothing, as the public perceives it. In this way, we should strive to be more like accountants in protecting our brands (whether that is IFA or a replacement) and encourage the public to have more confidence in seeking financial advice as we IFAs have bothered to sit exams to demonstrate competence and are subject to robust regulation.

Just a shame that we could not put our own house in order before the regulator was forced to do it for us.......

@Chris Holmes and Sean Kelly

Sorry, but this is buyer beware.

I might not take my car to an unqualified mechanic, but then again, if my neighbour had been playing with cars for years, I might ask him to take a look...I just couldn't get him to give me an MOT certificate.

The assumption that the General Public are complete idiots is one that, although we all have anecdotal evidence in support, is still not actually true.

If somebody offers to do my tax return - as I can't be arsed and prefer to ignore it - I personally would only be interested in whether they're able to add up and have done it previously.

Alternatively, if I'm running a rather more complex business and need some advice on tax avoidance, I'd probably go and see a Chartered Accountant or, for a part-qualified, at least want to see some evidence of his credentials. Not because I understand accountancy, but because I'm not a total idiot.

[For accountant, read 'acupuncturist', 'reflexologist', estate agent or whatever].

As for a local business going to the wall because the unqualified accountant was incompetent (for which he can be sued, BTW), how many local businesses does this actually happen to relative to other factors? e.g. the business owner being incompetent, the Chancellor of the Exchequer being incompetent etc? Not many, I'd suggest.

The greatest risk warning that can ever be issued is that "A fool and his money are easily parted'. If people are reliant on the State to tell them what to eat, when to sneaze, who to take tax advice from, where will it end? A failure by the State to put Lollipop Men on every street corner?

If you treat people like morons, that's what they become. If they have to learn a bit of Savy from an early age, they'll survive. Life is not one huge hospital.

Seems to me that those that are not "qualified" enough always are the first to comment about RDR. Get real people its coming whether you like it or not.

Accountants need to be qualified. Book keepers trading as accountants are from my vast experience just that, book keepers. I have seen the "debris" caused by these "accountants".

If I went to an accountant I would expect them to be qualified as it shows that they have studied passed exams and pay to be accountants.

Ask any Qualified accounttant and yes they complain about the costs but at least what you think you get you are actually getting!

Being Chartered in the Accountants profession means that you are qualified.

Very good article

Michael, I think you are right.

I suspect Citywire just set up these topics (on a regular basis) in the full knowledge that the same bunch of people will re-hash their (previously stated) views, whether that be in favour of QCA Level 4 requirements, or against. The editorial team are no doubt snickering to themselves as we speak!

But as Michael says, whether we like it or not, there are now less than 28 months to get those qualifications.....now, where's that study book gone?!

Re Michael Brown.

You are seriously trying to tell me that a business owner paying 50p per hour for a book keeper often thinks he is employing an accountant??

I have been in business 27 years and have never had any book keeper approach me as an accountant or pretended to offer those services.

However when a business has had an investigation, I have heard all sorts of rubbish from business owners, poor book keeper right in the frame, those two things are very very different.

I do know and have known accountancy firns which are not qualified, however the owners have always been clear about this, to date I have heard nothing bad about any of these more than qualified firms.

Remember too, that most chartered accountants pay their staff low wages and employ mainly non qualified staff who are allowed to talk directly to the client and even 'advise' them, if this were to alter chartered accountants prices would go up as well.

Accountants have a better name than us and yet most arent qualified or trained to our level. That is a bit difficult to swallow, but fact.

We deal with many unpredictable circumstances, accountants in the main just deal with factual history, it is much harder for them to fail.

In truth I do not think that any government wants the public to hear the truth about their financial future, every successive government itself or through regulators likes to perpetuate the myth that a client paying small amounts of money for their future would be ok if only they chose the right adviser/product, they do this by supporting claims, steering clear of addressing the guaranteed minimum pension threshold etc with information to clarify how a member of the public must clear this first to be better off with savings and so on, why? Because 80% if the public saw their financial future on the path they are on from a, to them independent trustworthy source, there would be a massive loss of votes and an uproar.

The same way that the education system is always blamed for children's learning capability and not parents for not passing the right learning attitude etc to school on to their children.

Contrast our children's attitude to school to the respect shown by African children to education.

It suits everyone to maintain the staus quo, to avoid a potential 'poll tax' type of government popularity loss.

This industry is chasing a promised land that will never exist, it is about time that this was realised and achievable systems, goals and affordable solutions are found.

Some reality please.

MIB unfortunately we live in a society where caveat emptor only exists in certain areas.

I would totally support the buyer beware approach as long as those who hold the relevant qualifications and are members of relevant professional bodies do not have to pick up the tab when something goes wrong.

As long as these 'un-qualified' individuals are required to make it clear that they hold no professional qualifications and that the client has no statutory recourse let them select the cheapest option (like buying the cheapest life cover through Tesco etc).

@Sean

I think we're getting a bit closer in our views :-)

Anonymous 1

Did I mention 50p per hour??

The point is a Chartered Accountant is qualirified and accountable for his actions where as non qualified can "hide" do not pay the "Professional fees" .

I to have been in business for nearly 35 years so have the knowledge of these non qualified individuals.

Reality is that 2013 is coming so time is running out.

We are smeared with the bad advice all the time and the last way to overcome the bad advice is to get qulified.

@Michael Brown

Sorry, how can an unqualified 'hide'? Ultimately, an accountant depends on repeat business. Not easy to get this if you screw up.

Re Michael, sorry I am lost, what is happening in 2013 regarding accountants?

I think you arent talking about accountants at all but us?

I have been in management and own business for over 27 years, never in all of that time have I ever had any problem telling the difference, with accountants or book keepers, who are book keepers, who are non qualified accountants or who are chartered accountants.

I have never known any other person in business to have any problems either and I am a member of the chamber of commerce and know many business owners.

The time that the you know what hits the fan is when a business owner who is too smart for their own good has employed a book keeper to do the books the way they requested gets in trouble with VAT or tax then their stories start coming out, blame on anyone they can think of.

I agree with man in black they cannot hide from their clients, plus if we concentrate not on the book keeper but the non qualified accountant they are submitting forms to the Inland revenue and Customs and Excise if their figured do match the 'typical' percentages within their industry they will be investigated, a firm of accountants will have their clients checked anyhow as both of the investigation teams look for firms who will push their luck and stamp on them hard.

You can not seriously say that a business owner who employs a book keeper for around £15 per hour, who comes to their premises and enters invoices etc, thinks they are employing a chartered accountant equivalent?

Actually accountants are probably the best argument against qualifications, most people in chartered practises hold few if any qualifications at all, non qualified accountants hold their own and book keepers do some high quality administration work for firms at low cost and without formal qualifications too.

Plus the costs in that industry are well under control and none are subsidised by the government, ie no Legal Aid, no NHS budget.

Anonymous 1

You are looking at this from your prospective.

I am looking at this from a clients perspective.

Like you I have many years of experience with companies etc.

If you look at the smaller companies who beleive that they have Accountants I have found that clients are not aware if they are Chartered or not.

Chartered Accounts are qualifierd where as many "accountants" are not. This is the issue.

Yes and 2013 will sort out the professionals against the non professionals as well who work under the various FSa remits.

This is what the article is about is it not?

Anonymous 1

You are looking at this from your prospective.

I am looking at this from a clients perspective.

Like you I have many years of experience with companies etc.

If you look at the smaller companies who beleive that they have Accountants I have found that clients are not aware if they are Chartered or not.

Chartered Accounts are qualifierd where as many "accountants" are not. This is the issue.

Yes and 2013 will sort out the professionals against the non professionals as well who work under the various FSa remits.

This is what the article is about is it not?

Re Michael,

From my perspective? A business owner who has used accountancy services and part of a business community who uses all of these services?

We and they are clients?

Honestly only when a business has decided to submit their returns themselves and push the boundaries of what they offset as business expenses or wangle some cash out have they, amongst any other excuse they can muster, blame the book keeper.

If you are saying that many people who use Chartered Accountants did not know that the few people that regurly prepare their accounts are not, or may not hold any qualifications, then yes, I agree 100% as only after 10 years did I realise that the people within a chartered firm who prepared my books held no qualifications, however the individual who submitted all tax returns was a chartered tax expert.

Nothing of what I have seen from a client point of view is a good argument for compulsory qualifications in their industry, prices are reasonable, quality is good and the clients respect the industry.

Contrast that with ours and the basic qualifications we hold, but intense CPD and initial training in each firm we have moved to.

Our cheapest hourly rates are 25% higher than their normal rates, respect of the industry has got worse with heavier regulation and qualifications, theirs is good, very few people in the community understand what we do or can do for them.

No one appears to acknowledge that we work with potential future scenarios, usually based on clients (quite rightly) optomistic views of their future and financial climates which will occur in the future during that clients financial, path none of which we have any control over and all with so many potential variables that even the largest computer could probably not foresee all of those possible variables, never mind us calculate them in to our advice process. What could possibly go wrong? Contrast this with law and accountancy which usually deals with historic factual events, usually recorded or witnessed.

There is no reality with the limits of what financial advice can achieve, yet also no acceptance that the consumer is equally or even more damned if they dont!!

Many think they can be life long failures in everything they do but an adviser should be able to make their financial lives good!!

All of the people in influential roles appear to be moving the industry to a destination they do not know, have not thought about, that the public has not asked for, probably does not exist, and if it did exist will exclude at least 60% of the population on cost alone, ie if the perfect system existed they could not afford it.

I hope for accountants sake they do not adopt any of the ideas from our industry and certainly do not employ anyone from the regulator or high profile consultancies who rolled out anything in our industry as it all has failed terribly.

If we were accountants with our regualtion etc, 90% of the current accountant's clients would submit their own annual declarations etc.

we are the example not to follow as things stand to day and in 2013.

The public arent buying the ideas.

Now that is looking at clients first not implementing just what we 'think' would be a good idea, they are usually for someone else's benefit not the clients.

Michael Brown - a valiant attempt to try to bring the discussion back on course...... Citywire should 'e-chair' these blogs to ensure that the topic is not hijacked for an attack on RDR or FSA, as is usually the case.

Summary: we are agreed that 'Accountant' should be a protected title for Chartered or Certified Accountants and that other, non-qualified book-keepers should find a new title to avoid diluting - and benefitting from - a brand that should otherwise carry a high quality mark.

Re anon 2, if that were to happen then EVERYONE who works in one of those businesses should be equally qualified, currently they are not, often one qualified person over sees ALL of the accounts and sometimes not always one certified tax planner deals with taxation.

So that would be over a billion pounds of transactions min?? How much of that can they see?

Hardly an argument for qualifications.

As others have said more of an attempt at a closed shop.

You cannot do that in our industry, non qualified staff arent allowed that amount of involvement.

You are frankly talking rubbish.

Dear Anon 1, I am convinced by your comments that you do not have an understanding of the workings of a firm of Chartered (nor Certified) Accountants. I had worked within regional and national practices for most of my career, so am less than pleased to understand that I am talking rubbish......

You really have missed the point, although I will try to enlighten you on how well Accountants (those of the qualified variety) understand risk and liability. Up to 75% of partners in a Chartered practice must be Chartered. They are responsible - collectively as a practice - for all work produced, whether compliance, consultancy, advice or audit. And you are right that much of the work is carried out by often qualified, but not always Chartered/Certified fee-earners. This is not wildly dissimilair to a good IFA model, in which paraplanners will produce most of the report and compliance work and qualified IFAs will have the responsibility for advice and client management.

BUT the point is that under this arrangement, whereby a client receives advice from a Chartered Accountancy firm, it is qualified accountants who retain the liability for their work, all of which is set out in the enormous tome, the Members' handbook. An unqualified accountant can still use the same brand without the same responsibilities and liabilities; an unqualified or restricted adviser cannot parade as an IFA.

Let the public understand who they are dealing with. And this is NOT a closed shop - there are NO barriers to sham accountants training to be qualified to Chartered or Certified level.

Anon 2, I understand completely, it is very different to our model, I have used and been friends with a large accountancy practice for many years and as I said only really understood it 10 years in when the conversations came up with one of the staff who I have known all of my life, I seriously think that if they had not known me so well, that none of the others, close as we are, would have said anything.

When the partnership was large, there were 4 partners and 4 offices, in the office I dealt with there were 9 staff all of whom were involved with clients, only the receptionist did not deal directly with clients on any matters even though they too did some basic functions.

The turnover of the businesses through that office would be 10s of billions of pounds, through their larger offices much much more, there was only one chartered qualified individual in the office and one charterered tax specialist, the chartered tax specialist qualified later in their career although always did that role.

Now I rate these people and I am not being negative about them. We are talking about accountants adopting our type of qualification system to retain the accountant name.

Having managed large businesses for other people I absolutely know that one person cannot watch that level of work through a business there is far too much.

But that business is classed as chartered.

This is completely different to financial advisers where only qualified people are allowed to touch or communicate certain aspects of our work with clients.

I do not know of any paraplanner who is not qualified at some level, I (think) technically they dont need to be, but the work is impossible at any involvement without a lot of knowledge and experience, even the administration staff I have ever worked with anywhere have held qualifications. Only report writing for spelling etc is ever touched by lower qualified individuals.

I was also under the impression at least one admin staff if they do certain functions must have the full financial planning certificate (or whatever it is called today)? I cannot remember what those functions were.

This article is giving the impression that Chartered Accountants give a full qualified service and those outside do not, that is simply not the case, one person in the office gets the qualifcation and everyone in the place is automatically given the stamp of approval.

All of our advisers are qualified, trained and tested regularly, chartered in our industry is simply a higher level of qualification, it could not be more different to your industry.

The simple reason our industry does not carry the same prestige is that there is no acknowledgement, either from the regulator, government when they discuss pensions to the wider population, the likes of the CII etc that we are attempting to predict so many futures, the client's, the economic future, retail price inex, AEI and so on that by nature we can never be as accurate as accountants or solicitors for example. Yet the impression remains no matter what happens in the World 9/11 the credit crunch etc that advisers could construct a solution to weather these situations and still remain on track, providing the clients attitude to risk was taken correctly.

We leave accountant staff standing for training, testing and qualifications, I will sit around 15 tests this year alone just on CPD and possibly 2 more exams, certainly one. I do 200 hours of exam study per year alone. Then CPD which I barely log I log about 40 hours of it and the other 300 hours doesnt really matter.

You really think your industry wants what we have?

You would lose around 10 weeks per year min per staff member.

the accountants that set up on their own without qualifications are usually the very people we dealt with for years in the chartered practise who were allowed to discuss everything previously with their clients anyhow, so what is the difference?

Book keepers play a different role to those people and allowing your current qualification system to demote ex chartered staff to book keeper level is simply an attempt to steal their work and stop staff setting up as easily without really embracing qualifications.

Solicitors are also very similar to accountants.

It is only us mugs who operate this way.

Ironically they both hold the prestige!!!!

And we still get advisers banging on about more studying/qualifications.

PS I forgot to add.

Even when one is qualified and experienced if the adviser moves to another firm they arent allowed to advise clients or touch a case without first going through a series of training and tests which first allow them to see clients then over a period of time, usually 3-6months they go CAS status, competant adviser status. They are back to 'trainee status' for that period.

You want to adopt this system for all of your staff who do 'accountancy' work?

I bet you do not.