Imagine being asked to predict the next 30 years of someone’s life on a letterhead or with a signature.
That is exactly the request that come in to me as an accountant. “Can you do an accountants letter or sign a declaration to confirm a client’s ability to repay the loan?
AKA: Can you take on the bank’s responsibility, carry the risk and sign a letter that your professional indemnity insurance won’t cover when it all goes wrong?
As an accountant, I give the facts of tax returns, financials and BAS. The history is mine to deliver. But the future? Predicting repayments belongs to lenders with their algorithms and data analysis. And even they get it wrong. Expecting me to sign it off with a pen is not risk management, it is lazy and irresponsible.
Ironically, I am also a mortgage broker. I deal daily with the lenders who send these letters and they know the request is off limits. The Banking Code says banks cannot ask because assessing capacity to repay is their job, not mine.
As an accountant I present the numbers with accuracy and as a mortgage broker I structure the loan and make sure the story makes sense. But I will and cannot sign away responsibility for something that only the lender can decide.
So when that request arrives, the response is simple: I will give you the numbers. I will help with the loan. But if you are looking for a signed guarantee that works better than your algorithm, you are asking the wrong person.
You would tell me and I know someone’s friend’s accountant supposedly signed one. That does not make it right. It just means they ignored the rules that every accounting body has been clear about.
If you really want guarantees, get into NDIS property. That worked out well… for the salespeople. Oops!!! That is another story for another day.
Disclaimer: General commentary only. Accountants may provide factual financial information but repayment assessments are the responsibility of the lender.