Offshore ‘not cool’
Accountants and planners have been slammed for sending clients’ financial details overseas, writes Tim McIntyre
SENDING money offshore was once the domain of the clichéd rich businessman with accounts in the Cayman Islands, but when ordinary Australians are presented with the idea of their own financial data being handled offshore, they are far from comfortable.
A new survey saw 93 per cent of Self Managed Superannuation Fund trustees condemn the practices of accountants sending work to offshore suppliers.
The data released by Superfund Wholesale found the negative attitude towards “offshoring” by accountants and advisers was driven largely by grave concerns about privacy and security.
Superfund Wholesale also reported experiencing a recent spike in inquiries around offshoring, with 80 per cent of calls received from professionals unhappy about extra work being created by instances of communication breakdown and high staff turnover at offshore providers.
The type of work being sent offshore included everything from administration tasks to detailed financial and accounting work.
The practice is legal as long as clients are informed, but at times the method of conveying that information left a lot to be desired, according to Superfund Wholesale director Kris Kitto.
“Outsourcing may be warranted for certain tasks, when it comes to SMSFs it is unnecessary,” Mr Kitto said. “The ATO and the professional accounting bodies require accountants to inform clients when their work is being sent overseas. However, clients are often oblivious to this practice as disclosures are buried in the fine print of the engagement letter or agreement.”
Of the 560 trustees surveyed, 95 per cent said they would reconsider the services offered if they were advised their personal financial information would be sent offshore, while 84 per cent were very likely to switch accountants or advisers.
These stated they would forgo any fee discounts in order to keep their personal data in Australia.
“The perception of clients is that outsourcing their accounting work offshore is not secure and perception is king,” Mr Kitto said. “Outsourcing offshore can be significantly more complex compared with a business with all data stored locally. Having the entirety of a clients’ SMSF work conducted in Australia is more efficient when it comes to delivery, producing better results with less friction. Pricing is a ‘hygiene’ factor only – it is only one part of the value equation,”
The majority of respondents agreed government agencies should be more involved in regulating offshore outsourcing, so that it is clear exactly who is handling their personal financial information.