In a submission to Treasury, ASFA has called for the existing accountants’ licensing exemption to be abolished, suggesting that it might solve the problem of too many people in SMSFs that shouldn't be there.
ASFA CEO Pauline Vamos said that any person providing advice on SMSFs should be subject to the Australian Financial Services Licence requirements.
She said limiting an authorisation to SMSFs could mean accountants won’t assess whether or not a person is actually better off in an SMSF or their current fund – because they don’t have the authorisation to provide advice on the other products.
“When the accountants’ exemption was developed, the debate at the time centred on the fact that many of the people that accountants were servicing were business people and, as such, quite sophisticated as investors,” she said in the submission.
“As such, with the growth in SMSFs and the potential for unsophisticated clients to take up SMSFs, it is important that greater consumer protections be put in place.”
The relationship between accountancy firms, real estate agents, mortgage brokers and law firms has also been called into question, with the new ability for SMSF trustees to borrow money through limited recourse loans and then buy property assets. ASFA said there was no obligation relating to best interest duty or disclosure of conflicts and remuneration, because property was not regulated as a financial product.
“ASFA strongly urges ASIC to issue regulatory guidance in relation to the provision of advice in relations to SMSFs. This guidance should include disclosure of risks, including investment risk and other risks such as marriage breakdown, ageing and relating third parties.”
ASFA also called for a shortened time to apply for a licence, to match significantly shorter deadlines in the implementation of FoFA and Stronger Super that other financial service providers have had to deal with.
“We would recommend a one year transition only, with a maximum of two, but believe June 2016 is not in the best interests of consumers.”
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Adam P on 10 Jan 2013 11:08 AM
Given the extremely low entry level PS 146 requirements to provide full advice, certainly Accountants should have to complete this level of specific financial advice education to provide more SMSF advice.
As stated so many accounts set up SMSF's and help with rollovers, etc but do nothing in the way of the required costs / benefits of leaving existing super, insurance, etc. to go into SMSF.
When will ASIC, ICAA, CPA, ATO or any body ever start to pull up accountants for providing massive amounts of AFSL / SMSF strategic and product replacement advice with zero AFSL compliance. Because so much of it happens already and is likely to get far worse with the cut down, half arsed proposed Accountants AFSL. Accountants simple don't do AFSL compliance and won't - but never get busted for it.
Where is the level playing field regulators??
Same education, same compliance for the same work, not too much to ask for.
PS - for those educated accountants claiming the high ground, i have a B.Ec, Dip FP, SSA and believe all advisers should have to be degree and professionally qualified.
MG on 10 Jan 2013 01:07 PM
I could not agree more with Pauline. If accountants want to play in the SMSF advice space, then they, like evrybody else, should be subject to the Australian Financial Services Licence requirements. There are some accountants that are great at providing advice, however, there are others that are real duds - so why should these people be entitled to a free ride.
Jason M on 10 Jan 2013 01:49 PM
what concerns me is the lack of consumer protection documents. SMSF established via planners provide consumers with SoA's, FSG etc and must comply with all aspect of the corporations law, have PI cover and belong to an external complaints body. SMSF established via accountants provide zero protection documentation and certainly nothing in writing setting out implications. Compare this to a small personal loan where at least some documentation is provided.