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Do bookkeepers risk client relationships by ignoring accounting provider T&Cs?

Clayton Oates outlines his concerns about what might be happening with clients private data.

Australian financial technology leader, bookkeeping business trainer and keynote speaker, Clayton Oates, has called out accounting software providers. Clayton has warned bookkeepers and accountants they may risk their client relationship and licences if they don’t discern if controversial data-mining practices are being deployed on their client’s financials.

In an interview with The Informed Bookkeeper, Clayton expressed concern that practitioners may be unknowingly complicit in sharing private financial information with cloud accounting providers. Practitioners may do so by signing clients up for products and agreeing to Terms & Conditions that have no safeguards to prohibit data mining activities.

Clayton attests that the way this information is being used by some tech vendors internationally is a worrying trend that could erode trust in the profession. It could also damage businesses reputations and open the door for legal backlash against bookkeepers and accountants here in Australia.

“Enabled by the T&Cs, some tech vendors view clients’ financial information as their own in ways that exposes clients’ data and has triggered suggestive selling,” said Clayton. “An example is peeking into the client’s financials and determining that the client may be experiencing a cash flow crisis and in need of some short-term financing."

“Co-incidentally the business then receives a direct offer for finance, with loans only available from the vendor, or related entities, without the client having any idea that their private financials had been mined for this purpose."

“This could leave bookkeepers and accountants vulnerable to legal action from clients who did not agree to their financials being viewed by the software vendor."

“While not all vendors do this and I’m not suggesting any laws have been broken, it certainly breaks the trust bridge with the client. The issue is that this type of data mining appears to be covert and largely the bookkeeping and accounting profession is unaware that it can occur." 

“So how do we know which vendors can, and are, undertaking these activities?” continued Clayton. “Some vendor privacy statements speak in terms of any data you include on their platform can be used by them to provide services to you that they think may benefit you. You may also see clauses like ‘The personal information we use includes... information about your activities, your interests and preferences; insights about your finances or your business’." 

“Legal terms like ‘without limiting’, ‘amongst others include’ and ‘subject to change’ imply free reign to use customer data for any purpose and leave our profession exposed,” continued Clayton.

While Clayton acknowledges the size of the issue requires more investigation and combined efforts across the profession, associations, and government to establish useful ways to address it, he does make some suggestions and recognise some already proactive work in safeguarding client data.

“At the very least, specifying what vendors won’t do with client and firms’ data in their contracts might be a useful start,” said Clayton.

“These discussions may look to lobby for clear and effective ‘opt in’ and ‘opt out’ functions that unlock and close any data-mining opportunity for the vendor."

“Fortunately, we live in a competitive marketplace and already some vendors have seen that ethical data custodianship could be a point of differentiation for continuing and emerging partnerships,” continued Clayton. “Xero, for example, is now proactively stating that the data on their platform is your data, not theirs."

“A Data Council has been established to oversee the responsible use of data.  We now wait for all vendors in the industry to declare their hand on this matter."

“People also need to be able to exercise a right to be forgotten and have their data removed upon request. In Europe this right is backed by legislation, however we don’t have the same legal rights here in Australia at this stage."

“At the cornerstone of the client and accounting professional relationship is trust and we need to ensure that this trust relationship is also backed up by the software vendors we recommend to our clients."

“We are at a moment in the profession / industry relationship where we need to decide if we are going to accept a trade-off of our client’s data for convenience. This discussion and decision must involve the client. After all, it’s their data."

“I’d encourage every bookkeeper or accountant to carefully read the Terms & Conditions they are signing their clients up to, seek answers to their questions, and provide up-front full disclosure to clients about the opportunities and potential threats of using the platform."

“It may be that tough decisions are needed, such as pausing or ceasing to recommend a solution provider that accountants or bookkeepers may have partnered with for many years,” said Clayton.

“To do so, though, it could protect their business, their clients’ businesses and help them stay true to their own ethics and integrity.”

There’s more to learn from Clayton Oates at The Bookkeeper Event! Get your ticket and come meet him live and in person in Cairns on October 6-8!