Registered tax (financial) advisers have a higher obligation than other financial planners when disclosing information about their clients to third parties. This is because the Tax Practitioners Board’s (TPB) Code of Professional Conduct has more stringent requirements than the Privacy Act.
How the TPB and the Privacy Act differ
There are three key differences between the TPB’s requirements and privacy law:
But the TPB Code requires you to obtain your client’s consent when disclosing any of their information to a third party.
The ideal time to do this is early on in your relationship. Include information about how you will use and disclose your client’s information in your client engagement letter, fact find or other onboarding documents. You should discuss it with your client and ask them to give their consent by signing the relevant documents.
Information can be disclosed in a myriad of ways
It’s easy to overlook some of the ways you may disclose client information to third parties. Consider these examples – all of which require disclosure:
To ensure you comply with both the Privacy Act and the TPB Code, you need to identify all the third parties you disclose client information to and make sure they’re described in your consent documents.
Ideally, you would tell your client each and every third party you’re disclosing their information to, but this can be complex and lengthy. So it is sufficient to provide a generic description of the types of businesses you may provide their information to.
Why are disclosure obligations higher for tax (financial) advisers
Registered tax (financial) advisers hold highly confidential financial information for their clients. The rigorous disclosure obligations in the TPB Code recognise that clients have a strong interest in ensuring that their information remains confidential.
Indeed, the TPB Code standard is helpful for any professionals who hold personal, legal or financial information for their clients.
If you’re a registered tax (financial) adviser or hold confidential client information, it’s a good idea to review your disclosure and consent processes and documents to make sure you meet your obligations. Privacy and confidentiality obligations can be complex, so if you’re unsure we’d be happy to help.