Date posted: 31/05/2022

How to solicit new clients without crossing ethical lines

Gaining business is critical to your success as an accountant. Here’s how to make sure your pursuit of clients won’t land you in ethically muddy waters.

In brief

  • Members need to be aware of their ethical and professional obligations
  • Members without a Certificate of Public Practice may breach regulations by soliciting clients
  • Breaching ethical principles may break laws relating to misleading claims about your services

Soliciting new clients can enhance your reputation as an accountant and increase your business. 

You may want to proactively target clients who need the services you offer, who you would like to work with, or those who want to continue working with you even after you change employers or firms. 

There is no general rule against soliciting new clients. However, as a Chartered Accountants ANZ (CA ANZ) member, you need to be aware of your ethical and professional obligations as well as any relevant laws or other legal issues. 

If you don’t manage these obligations properly when soliciting clients, it may lead to allegations of professional misconduct.

What are the rules?

There’s no restriction in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code), that prevents members advertising their services – provided it is not false or misleading.

The CA ANZ Regulations don’t restrict advertising either. They simply say you must stop advertising or marketing communications if the recipient asks to no longer receive them (Regulation CR 3.6).

However, that doesn’t mean that anything goes. When providing professional activities, R120.3 of the Code requires that members apply the conceptual framework to identify, evaluate and address potential non-compliance with the fundamental principles:

  • integrity
  • objectivity
  • professional competence and due care
  • confidentiality
  • professional behaviour.

As such, it’s important to consider whether your solicitation techniques stand up when viewed through this ethical lens.

When does solicitation cross the ethical line?

You may be breaching ethical principles if you:

  • copy your employer’s client lists and contact information before leaving and starting up in competition, then use those details to contact clients (ethical principle: confidentiality)
  • while still employed with a firm, use its database to solicit clients (ethical principle: confidentiality)
  • make inflated or misleading claims about your services that you can’t substantiate (ethical principle: integrity and professional behaviour) 
  • make disparaging comments about a client’s current accountant (ethical principle: professional behaviour)
  • start a practice in competition with your former employer, contrary to your employment contract (ethical principle: integrity).

Members may also breach CA ANZ regulations if they solicit clients without holding a Certificate of Public Practice, as required under CR 2 Certificates of Public Practice.

Competition laws to consider

As well as complying with their professional and ethical obligations, members need to comply with competition and consumer laws by competing fairly and avoiding engaging in anti-competitive behaviour such as cartels, exclusive dealing, unfair dealing, or unconscionable conduct. 

Importantly, breaching ethical principles may also break the law, particularly in relation to making misleading claims about your services. 

Members should ensure they:

  • determine their own prices and not agree with other members or competitors to fix prices
  • never act unconscionably to another party
  • never use unfair tactics to extract benefits from another business or professional
  • do not make misleading claims about their business or their services offered
  • be transparent in their advertising and dealings with clients, particularly in relation to their fees and scope of services offered
  • understand their clients’ rights under Australian consumer law.

The Australian Competition and Consumer Commission (ACCC) provides further guidance on its website.

‘Importantly, breaching ethical principles may also break the law, particularly in relation to making misleading claims about your services.’

Restrictive covenant clauses in employment contracts

In general, there is no legislation that directly restricts a member from soliciting clients of another member and so members are free to approach any person to advise them of the fact that they have set up practice and are providing services to the public.

However, members may have restrictive covenant clauses in their previous or current employment contracts. These clauses are intended to prevent a former employee from specific actions during or after ending employment. Employers typically include these clauses to protect their business and client base.

There are different types of restrictive covenants. 

  • Non-compete clauses: restrict a former employee from working in, or for, a competing firm once they have left the old firm. 
  • Non-solicitation clauses: restrict a former employee from taking clients away from a firm after they have left. 
  • Non-dealing clauses: restrict a former employee from dealing with clients they had a previous association with during their time at the previous firm. 

Restrictive covenants usually specify a time or geographical area that is ‘out of bounds’.

However, not all restrictive covenant clauses are enforceable by law. So, whether you’re an employer seeking to invoke such a clause, or an ex-employee defending yourself against allegations of a restrictive covenant breach, you should seek legal advice from an expert in this field before you act.

Where to go for more information

Do you have any further questions or need practical guidance on a complex professional issue? As part of your membership with CA ANZ, you can speak directly to an experienced member of the Professional Standards and Ethics Advisory team. 

This free support service is completely confidential and available to all current members. Make an enquiry via phone or email, or by using the online form provided on our contact page below.

Contact us

Engagement Letter tool 

Engagement letter tool containing sample clauses to assist members in practice to prepare engagement documents for use with their clients in Australia. Recently updated for the amendments to APES 305 – Terms of Engagement (operative July 1, 2021) Read the important information at the start of the tool before you get started.

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ACCC Competing fairly in professional services

Like all businesses, professionals and their associations must compete fairly and avoid engaging in anti-competitive behaviour such as cartels, exclusive dealing, unfair dealing or unconscionable conduct. By enforcing the Competition and Consumer Act 2010 , the ACCC provides for the protection of professionals and consumers of professional services.

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