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Professional practice

Disbursements

Clause 21:

A licensed immigration adviser must:

  1. charge disbursements to the client at the actual amount, if known, or at a reasonable estimate of what it costs the adviser to provide the service, and
  2. work in a manner that does not unnecessarily increase disbursements, and
  3. inform the client of any additional disbursements, or changes to previously agreed disbursements, and ensure these are recorded and agreed to in writing.

Disbursements are supplementary costs which advisers may incur on their client’s behalf, and can include, among other things:

What has changed compared to the 2010 Code?

2010 Code – did not specifically mention disbursements separately, rather costs  was used to refer to both fees and disbursements

2014 Code – requires advisers to charge disbursements to the client at the actual amount, if known, or at a reasonable estimate of what it costs the adviser to provide the service.

Guidance for calculating and processing disbursements

The table below outlines some ways in which an adviser could manage disbursements. These may not be the only ways in which disbursements can be managed and is intended as guidance only.

Steps

Actions

Calculating disbursements

Ensure that:

  • disbursements to clients are charged at the actual amounts and are not marked up
  • general disbursements (e.g. international telephone calls, photocopying and other such items) may be charged at a reasonable estimate of what it costs to provide the service.

Be practical, as a lot of time and effort can be spent analysing costs, which is not good use of an adviser’s time.

Processing disbursements

Disbursements can be paid directly by the client or by the adviser, generally in the following ways:

  • directly by the client to the supplier (e.g. the client pays the Immigration New Zealand application fee directly to Immigration New Zealand)
    • No further action is required from the adviser, but it is good practice to obtain evidence of the payment and record this on the client’s file
  • directly by the adviser (e.g. the adviser pays the Immigration New Zealand application fee to Immigration New Zealand), who then seeks reimbursement from the client by issuing an invoice
    • The adviser uses their business credit card or practice account to pay the disbursement
    • The client is issued with an invoice for the disbursement
    • The adviser receives payment from the client
    • The client may be issued with a receipt – this is mandatory for a cash payment
  • by the adviser, who has received an advance payment from the client, who then can issue an invoice to the client and transfer the funds from the client account to the practice account
    • The adviser uses their business credit card or practice account to pay the disbursement
    • The client is issued with an invoice for the disbursement
    • The money is withdrawn from the client account to reimburse the practice account.

Below is an example of a tax invoice for a disbursement where the client has paid the money in advance and the adviser is seeking reimbursement from the client account:

 

Image of an example Tax Invoice.

Following issue of the invoice the adviser should transfer the $3,200.00 from the client account to their practice account.

Not unnecessarily increasing disbursements

If an adviser is working in a diligent and timely manner and taking due care, then there should be no reason to unnecessarily increase disbursements.

Remember that under clause 5, an adviser must disclose the existence of any financial or non-financial benefit the adviser will receive as a result of the relationship with the client.

Therefore if an adviser receives a commission for recommending or using a particular provider (such as a translator, consulting expert, etc.) the client must be told about the existence of the commission.

Changes to disbursements

As with changes to fees, discussed above, in some situations there may be additional disbursements or changes to disbursements that neither the adviser nor the client was aware of before the original written agreement was entered into. If this is the case, then under clause 21(c), the adviser must obtain the client’s agreement in writing to any additional disbursements, or changes to previously agreed disbursements, as soon as the adviser knows about the change.

What has changed compared to the 2010 Code?

2010 Code – required advisers to obtain agreement in writing to any material increase in costs as soon as the increase was known to the adviser

2014 Code – requires advisers to inform the client of any additional disbursements, or changes to previously agreed disbursements, and ensure these are recorded and agreed to in writing.