Why accountants should take another look at the ‘forgotten’ DPB licence
We have a lockdown quiz for you:
What does DPB stand for?
How many of your staff, rather than partners know the answer?
How many of your clients have a clue, or even care?
Probably best to get the technical bits out of the way first. For those old enough to remember the Designated Professional Body (DPB) Licence was afforded to certain professional bodies back in 2000 with the introduction of the Financial Services and Markets Act 2000 (FMSA) and the creation of the FSA, now known as the FCA (Financial Conduct Authority).
In practice, few Certified and Chartered accountancy firms have a DPB licence. But why? Typical answers include that it is just another cost, and more admin with their Institute or PI insurers to deal with. While for others it is so they can offer “fee assurance” in case of HMRC investigations, and even peace of mind or “just in case”.
In reality many practitioners have forgotten what the licence is for and simply keep paying the annual subscription fee
DPB Licence and accountants
Day to day a DPB licence allows an accountancy firm to undertake a range of investment activities, that are incidental and complimentary to their tax and accountancy work. Many SME owners will discuss the merits of pension funding with their accountant and the DPB licence allows the firm to pass a client’s details to an adviser to arrange a meeting to discuss. Further, the firm can advise on and arrange a specific 'pure protection contract', such as fee protection or key man insurance.
With business and personal plans being rewritten right now it makes sense for accountants to engage with their clients holistically and use their DPB licence proactively to advise on both business and personal matters - the close relationship and access to the data puts them in the best possible position to do so.
What is it? Should you know? Will clients care?
However, returning to the three original questions!
It's worth thinking about how important the regulatory licence is. Some twenty years ago Chartered and Certified accountants were deemed competent enough to be awarded a carve out from being fully and directly regulated by the then FSA. In turn, their Professional Body took responsibility for managing their members and the DPB licence.
Our independent research indicates that few younger partners (never mind the staff) are aware of what the licence is for, and in some cases whether they have one.
Should clients care? Well probably, if they thought their accountant could offer a wider and more efficient service, whilst reducing costs at the same time.
Leveraging the trust, and the data
The opportunity exists for accountants to naturally extend beyond the basic salary/dividend and personal tax services, and to link the financial health of the business more directly to the personal and family wealth of clients. Looking again at the scope of the DPB licence is one way to think about how this can evolve profitably.
The final question for you. How the heck do I find information about the DPB Licence on my Institute’s website…. ?
Actually have a look at DPB explained on ICAEW site, or Exempt regulated activities on ACCA site, and the designated professional bodies area on ICAS pages.