Accountants warned on importance of scoping advice

Solicitor Jaime Lumsden Kelly from the Fold said it is very important that the client understands what financial advice is being provided when they receive advice services, because misunderstandings around this has the potential to lead to disputes.

An important step to achieving this, she said, is giving clients proper letters of engagement where they indicate to clients what they are and are not providing to the client.

“If the client thinks you’re advising on something that you’re not, when something goes wrong in that respect they’re going to blame you,” she said.

“if you had told them up front that you weren’t advising on that particular thing, they can say ‘okay I understand that’s for me to sort out’ or ‘I would actually like you to advise on that’.”

The risk she said is then dealt with one way or another, she said.

It is also important, she said, that where a client wants a range of services but unable to pay for all of them that the client decides which of the services are most important, rather than the accountant deciding for them.

“It’s better to have an upfront conversation with the client about what their objectives are and what it is they’re trying to achieve, and then provide an upfront indication of what’s involved and what it’s going to cost,” she said.

The client can make their own decision about what is their priority, she said.

She also reminded accountants that where they can’t provide certain services, they need to send the client elsewhere.

“So they might provide some interim advice, or they may literally need to say to them; ‘look, the advice you need isn’t something I can provide, and I highly recommend you seek someone else out to provide that advice’,” she said.

“The best step to take in that case is to not just give the client the details of the contact, but to actually facilitate the meeting or contact and the recommended adviser, it keeps the accountants in the loop to start with, so it looks like they’re providing a good service to the client.”