CPA Australia has advised its members against signing financial advice certificates required by some banks to finalise limited recourse borrowing arrangements (LRBA) due to any professional liability that may arise from doing so.
“We issued guidance in 2011 saying we recommend not signing financial advice certificates because you are effectively accepting the risk,” CPA Australia financial planning policy adviser Keddie Waller said.
In circumstances where the practitioner felt compelled to sign the certificate to aid their client, Waller said there were ways to try to circumvent the associated liability.
“For those members I know who have signed one quite often they’ve literally crossed out everything [all the conditions] on the page, signed it and the bank still accepted it,” she said.
She said she understood practitioners were often faced with extreme time pressure to sign those types of documents, making the decision even more difficult.
“We’ve been hearing stories about accountants being asked to sign a certificate the day before settlement or at the last minute,” she said.
“You can’t go through and do the due diligence in that period of time, so it’s one of those decisions you have to make as to whether you are comfortable with doing it or not.
“We think you shouldn’t sign it because you’re taking on the risk.”
On a positive note, she said the negative feedback about the requirement for a practitioner to sign a financial advice certificate was being noticed by lending institutions.
She cited specific feedback she had received from Macquarie to say the bank was hearing the concerns that the issuing of those documents was not appropriate.
While Macquarie did not go as far as saying it would scrap the practice, there was no doubt it was reviewing the process, she said.
