I billed for AML checks right from the get-go, and my clients are certainly willing to pay for it. Many are not happy about it, but then they are equally as unhappy about paying anything just to safely navigate our ridiculously complex tax system so they can do what they want to do - which is pay their tax.
Hugo I agree with the point you raise: that banks are now primarily profit-oriented whereas in the past they were focused on being a service-provider.
But I think there's another issue in play here too: the gradual tightening of the requirements of AML, and how AML is being implemented.
I think we agree that economic players need to be regulated, and hence anyone entering the field of economic activity needs to show they are acceptable players. But meeting AML requirements is a cost because it takes time, skill and other resources, both by gatekeepers such as banks and accountants and by the prospective players themselves. The question of how that cost is born or who bears it has not been adequately addressed.
Allica Bank's Conrad Ford implies that banks are willing to bear some minimal cost but beyond that they simply won't accept the client. Us accountants are in discussion about how much cost to absorb ourselves and whether, when and how to pass on those costs to clients.
Not only medium enterprises lose access to services. Recent media reports highlight how politicians can also lose access. Other media reports and my own experience in my practice show that socially marginalised groups also lose access to vital financial services - not because they are unfit economic players but because the issue of costs of the AML system has not been adequately addressed.
I would be more amenable to regulation of the profession if an integral part of regulation was an obligation on the part of either the profession or HMRC or both to provide tax advice to poor people, micro-businesses and marginalised groups. I'm 35 years QBE and specialise in startups and micro-businesses (<£30k Turnover), and it is (or should be) criminal that such people find it (a) so incredibly difficult to register for and enter into the UK tax system and (b) almost impossible to access sound tax advice they can actually afford. The profession overall seems to think it's perfectly reasonable that people pay from 5% to 30% of their Turnover simply to comply with tax laws and pay their tax.
From what I can see none of the professional bodies discuss this aspect nor believe their members have any obligation to meet the needs of our society for accountancy knowledge. For 10 years I have followed the industry discussion in the UK about regulation and not once has there been any mention that the profession might have such an obligation. Added to this is that ALL the big stories about accounting scandals involve regulated accountants, and I don't see that regulation is going to have any benefits whatsoever beyond further enclosing knowledge which rightfully should be accessible to everyone.
One aspect grabs me: you say " Traditionally, the accountant needs to own the client process ..." To me this attitude needs to be totally abandoned. Sure, as the accountant I have certain needs regarding statements I must make, info I must collect, responsibilities I must fulfill, and often a need to do certain steps in a very specific order.
At the same time, I always take the attitude that I must collaborate with the client around my needs and - most crucially - around theirs AS WELL. So that how the interacting actually proceeds is a result of this collaborating.
I would frame the situation, then, as the accountant needs to own their technical and professional needs but the whole process with the client is a relationship which both parties own and create together from their mutual needs.
Of course I as the accountant also have my personal needs alongside my professional-technical needs, e.g. some clients speak too quickly for me, so I need to ask them to slow down or repeat themselves.
I've always been intrigued by how the pre-mediaeval ppl did their bookkeeping prior to the Medicis inventing the Profit & Loss Report: all entries must have been posted direct to the Balance Sheet, and the Balance Sheet was one's only report.
This supports the view that "trading" isn't determined by achieving sales but rather by a demonstrable and active presence in the relevant marketplace.
Re the director's salary issue, I've never considered £8424 salary for a full-time senior role, i.e. £4.05 per hour, to be "normal market conditions". But I guess in another few years it could well be...
I totally agree about the feature lists. I started selling and modding accounting software in 1990, and back then extensive detailed feature lists were an essential and core selling tool. Another was offering your product's free trial with a demo company or demo data, so that a potential buyer can see within about 20 minutes whether a product is worth further exploration.
I recently spent about 3 weeks exploring a major practice mgmt package, in conversation with a (very good and helpful) salesperson, in order simply to work out what it did, the extent to which it fit my business, and how much it would cost. In the end it didn't fit - and the salesperson and I had wasted an enormous amount of time. We were both frustrated that the basic info about the software i.e. features and cost, wasn't simply available on the company's website.
What do these companies think? That they can persuade their software to fit your company by getting their salespeople to have long conversations with you? Do they think you won't find out when it's installed that it doesn't fit? James Ashford has the right attitude: it's about long-term relationships - starting with simple and open disclosure about the basics.
My answers
I billed for AML checks right from the get-go, and my clients are certainly willing to pay for it. Many are not happy about it, but then they are equally as unhappy about paying anything just to safely navigate our ridiculously complex tax system so they can do what they want to do - which is pay their tax.
Hugo I agree with the point you raise: that banks are now primarily profit-oriented whereas in the past they were focused on being a service-provider.
But I think there's another issue in play here too: the gradual tightening of the requirements of AML, and how AML is being implemented.
I think we agree that economic players need to be regulated, and hence anyone entering the field of economic activity needs to show they are acceptable players. But meeting AML requirements is a cost because it takes time, skill and other resources, both by gatekeepers such as banks and accountants and by the prospective players themselves. The question of how that cost is born or who bears it has not been adequately addressed.
Allica Bank's Conrad Ford implies that banks are willing to bear some minimal cost but beyond that they simply won't accept the client. Us accountants are in discussion about how much cost to absorb ourselves and whether, when and how to pass on those costs to clients.
Not only medium enterprises lose access to services. Recent media reports highlight how politicians can also lose access. Other media reports and my own experience in my practice show that socially marginalised groups also lose access to vital financial services - not because they are unfit economic players but because the issue of costs of the AML system has not been adequately addressed.
Forgive my ignorance, but what IS the "issue of multiple agents"?
Yes please, I'd appreciate reading the whole article.
I would be more amenable to regulation of the profession if an integral part of regulation was an obligation on the part of either the profession or HMRC or both to provide tax advice to poor people, micro-businesses and marginalised groups. I'm 35 years QBE and specialise in startups and micro-businesses (<£30k Turnover), and it is (or should be) criminal that such people find it (a) so incredibly difficult to register for and enter into the UK tax system and (b) almost impossible to access sound tax advice they can actually afford. The profession overall seems to think it's perfectly reasonable that people pay from 5% to 30% of their Turnover simply to comply with tax laws and pay their tax.
From what I can see none of the professional bodies discuss this aspect nor believe their members have any obligation to meet the needs of our society for accountancy knowledge. For 10 years I have followed the industry discussion in the UK about regulation and not once has there been any mention that the profession might have such an obligation. Added to this is that ALL the big stories about accounting scandals involve regulated accountants, and I don't see that regulation is going to have any benefits whatsoever beyond further enclosing knowledge which rightfully should be accessible to everyone.
Thanks for these very interesting questions!
One aspect grabs me: you say " Traditionally, the accountant needs to own the client process ..." To me this attitude needs to be totally abandoned. Sure, as the accountant I have certain needs regarding statements I must make, info I must collect, responsibilities I must fulfill, and often a need to do certain steps in a very specific order.
At the same time, I always take the attitude that I must collaborate with the client around my needs and - most crucially - around theirs AS WELL. So that how the interacting actually proceeds is a result of this collaborating.
I would frame the situation, then, as the accountant needs to own their technical and professional needs but the whole process with the client is a relationship which both parties own and create together from their mutual needs.
Of course I as the accountant also have my personal needs alongside my professional-technical needs, e.g. some clients speak too quickly for me, so I need to ask them to slow down or repeat themselves.
Thanks Makbul - very helpful!
I've always been intrigued by how the pre-mediaeval ppl did their bookkeeping prior to the Medicis inventing the Profit & Loss Report: all entries must have been posted direct to the Balance Sheet, and the Balance Sheet was one's only report.
This supports the view that "trading" isn't determined by achieving sales but rather by a demonstrable and active presence in the relevant marketplace.
Re the director's salary issue, I've never considered £8424 salary for a full-time senior role, i.e. £4.05 per hour, to be "normal market conditions". But I guess in another few years it could well be...
I totally agree about the feature lists. I started selling and modding accounting software in 1990, and back then extensive detailed feature lists were an essential and core selling tool. Another was offering your product's free trial with a demo company or demo data, so that a potential buyer can see within about 20 minutes whether a product is worth further exploration.
I recently spent about 3 weeks exploring a major practice mgmt package, in conversation with a (very good and helpful) salesperson, in order simply to work out what it did, the extent to which it fit my business, and how much it would cost. In the end it didn't fit - and the salesperson and I had wasted an enormous amount of time. We were both frustrated that the basic info about the software i.e. features and cost, wasn't simply available on the company's website.
What do these companies think? That they can persuade their software to fit your company by getting their salespeople to have long conversations with you? Do they think you won't find out when it's installed that it doesn't fit? James Ashford has the right attitude: it's about long-term relationships - starting with simple and open disclosure about the basics.