Accountants given green light to provide financial advice

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Up to 10,000 accountants will be able to broaden the scope of financial advice that they can provide should draft regulations pass into law.

According to an official statement from Minister for Financial Services and Superannuation Bill Shorten, the draft regulations, dubbed as a "win-win", expand access to financial advice and better protect investors by delivering on the government’s commitment to replace the accountant’s exemption with a new form of limited licence.

“The regulations will also benefit thousands of small businesses by creating a significant opportunity for up to 10,000 accountants and the estimated 18,000 financial advisers who wish to grow and diversify their business,” said Shorten.

“Collapses such as Trio highlight the need for investors to fully understand the alternatives before changing their existing superannuation arrangements. This new licence means licenced practitioners will advise on a wider range of alternatives, rather that limiting their advice to the establishment of a self-managed super fund.”

“By giving financial services practitioners the opportunity to expand their businesses, consumers can expect greater competition in the market and therefore more competitive prices.”

According to Shorten, the new limited AFSL will replace the current accountant’s exemption and will give up to 10,000 accountants the opportunity to provide a much broader range of financial advice.

Key changes include:


  • in addition to being able to advise on SMSFs and superannuation generally, licence holders will be able to give ‘class of product advice’ on basic deposit products, general and life insurance, securities, and simple managed investment schemes;
  • streamlined experience requirements for accountants who hold a practicing certificate issued by one of the professional accounting bodies (the Institute of Chartered Accountants in Australia, CPA Australia Ltd and the Institute of Public Accountants); and
  • an exemption from the audit requirements for limited licence holders who do not handle client money and instead submit an annual compliance certificate.

Shorten also noted that the reforms extend the consumer protection provisions of the Corporations Act, such as FoFA’s best interests duty, to financial advice provided by accountants

“I am also still considering whether other professional qualifications could also form part of the streamlined arrangements, for example, practicing certificates issued by the SMSF Professionals’ Association of Australia,” said Shorten.

“In addition to feedback on the draft regulations, I invite submissions to address this issue.”

Click here to see the draft regulations and draft explanatory statement. Submissions on the draft regulations close on 21 December.

The FPA has welcomed the draft regulations, having long advocated that, in order to provide greater consumer protection, all individuals who want to provide personal financial advice must be licensed. 

‘Financial planner’, ‘financial adviser’ to be enshrined in law

Also released today was the draft legislation regarding enshrining the term financial planner/adviser in Australia. Click here for the full story.

  • Another Mad Planner on 29/11/2012 10:48:51 AM

    Most people are blind. If the accountant has a liited AFSL then they have the same obligation to complaince as a Financial Adviser, fact find, best interest SoA, consumer protection via FOCS etc. It clearly says this in the article.

    "Shorten also noted that the reforms extend the consumer protection provisions of the Corporations Act, such as FoFA’s best interests duty, to financial advice provided by accountants"

  • Lets get real on 29/11/2012 10:37:39 AM

    Tom I belive your point to be true. However therein lies the big problem because its not the good ones that a lot of advisers are worried about. Its perhaps those that are not as good (yet believe themselves to be) who are looking for extra revenue streams. As long as the obligations are the same (best interest, SoA's etc) then happy to compete. Jasons point about the current SMSF situation is correct but hopefully the licencing will go someway towards reducing this. Some accountants will continue to flout the law as they do now but that needs to be left to the regulator to sort out (they likely wont as under-resourced).

  • Tom on 29/11/2012 10:23:04 AM

    Any good accountant is too busy doing accountancy. They are only too happy to have the excuse to pass financial planning work to competent & ethical financial planners. Maintain you competence and your ethics and you'll have no worries.

  • Jason on 29/11/2012 10:19:12 AM

    The majority of planners use retail super funds as opposed to industry funds for good reason. Clearly going by his comments this legislation is aimed at elliminating or reducing those that promote retail funds.

    For what it worth the institute hasn't stepped into this accounting practice since 2007. Pretty easier to sign off on a checklist. As far as i'm concerned, It will business as usually come kickoff for this piece of legislation. The majority of accountants i deal with already provide strategic and investment advice. Yes they are not buying the shares or managed funds but are telling them what shares to buy, what term deposit to invest in, what now frozen mtg fund to invest in, what super fund to avoid already.

    I'm at odds at how an accountant can currently "sell" a SMSF like a fast food restaurant handing out fries and a trust deed for a nice little $2500 onwards fee a year and yet a planner is required to spend 4-5 hours doing a SoA, ensuring all aspects of the corporation laws are followed with risk profiling, data collection, and know your client obligations, file notes etc, cashflow modelling etc. Now with FoFa dealer groups further want pages of forms completed as evidence of best interest duty and AML obligations. Why would accountants comply with the corporations law when now they can move business real property in a SMSF purchased with retail or industry super funds worth half a million with a few scribbles and diagrams on an A4 notepad.

  • Andrew on 28/11/2012 5:45:46 PM

    Time is SHORTENing until this ninnie and his pals are kicked out of office and I can't wait! Latest odds Coalition $1.30 Labor $3.20

  • Michael on 28/11/2012 2:30:53 PM

    I am a CA and CPA.We have an accounting business and a finacial planning business that operate side by side. We have had our dealers license for 25 years. We did it because it was the only way to do both functions properly. We have separate PI for each as they are different businesses with different risks. There are clearly different skills required in each businesswhich requries different ongoing training and CPD, not just initially.
    It seems that the "competition" issue is dominating the "competence" issue.
    Competiton has bought us such great outcomes in finacial planning and investment over the years. Generally resulting in people finding someone who met their investment need for a short term outcome and no thought to long term consequences.
    The single biggest factor in this is that competent accountants will recognise their limitations and limit their involement in this. We will be left with accountants who have committed to providing advice with commitment to ongoing CPD and a bunch of others chasing the quick buck who should be the last people involved.
    Competence should be held up as a higher target than competition. Competence costs money to maintain it.

  • John on 28/11/2012 1:55:22 PM

    Strategy is where the value is, implementation is where the work is. Once an accountant has given strategic advice via their limited AFSL, and then referred the client to a Financial Planner who then gives specific advice, will the consumer be happy to pay for it?
    There is clearly a market advantage of only having a limited AFSL Mr Shorten

  • Cameron on 28/11/2012 1:34:16 PM

    Interesting Stephen that your financial planner was giving you excellent taxation advice. Here in lies many of the issues and cross pollination that exists in both industries. To all - Get on and service you clients and they will not leave or change.

  • Lets get real on 28/11/2012 1:33:07 PM

    One thing I would like clarified please - are SoA's still required even on a restricted licence? If not why not?

  • Lindsay on 28/11/2012 1:25:25 PM

    Maybe Mr Shorten should ask the ASIC to provide him with how many investigations they have made on Accountants regarding advice given on Tax Effective Schemes over the years and how many SMSF have been established and still hold less than $100K in cash after 5 to 10 years.

  • Stephen on 28/11/2012 12:27:01 PM

    Regarding Mel James, I am currently doing a degree at the University of Canberra studying Commerce majoring in Financial Planning (actually a double degree as I am also doing a LLB). That is 8 units designed to give you RG 146 certification. That's a lot more work than doing a diploma and I still can't give advice on derivatives.

  • Stephen on 28/11/2012 12:22:49 PM

    I trust my accountant as they have never made any mistakes that I know of. I once asked about financial advice and he made it quite clear that he was not going to risk his good name by doing it. The Financial Planner that I used to use gave excellent advice regarding taxation, etc but the investment advice was marginally short of pathetic and I made it quite clear to them but they have super thick skins. Perhaps mixing accountants and financial advisers might be a good move to build confidence with the general public. I still think that some level of financial planning should be able to be claimed on tax.

  • Mel James on 28/11/2012 12:17:31 PM

    As an accountant I cannot see why there is a need for a restricted licence, if you want to give financial advice get a RG 146. And to those planners who go on about the advice given by accountants to SMSF's etc, having a RG 146 doesn't make you a tax expert either. The whole level of qualification to be a financial planner is a bit of a joke. If the industry wants to be taken seriously then expand RG 146 to a degree level.

  • Rashesh Bhavsar on 28/11/2012 12:09:53 PM

    I agree with Grant. Financial Planning and Accountancy are two totally separate fields in finance industry and requires core experience to become a true professional. I would not imagine to start Mortgage Broking or Accountancy just to get more business, rather I would continue to go deeper in what I do best.

  • Adam P on 28/11/2012 12:09:39 PM

    Yep 10,000 new competitors is certainly daunting. The real problem is that many thousands of accountants already provide massive amounts of AFSL structural SMSF advice with zero AFSL compliance. And you can bet big time that this will continue. Accountants hate SoA's and AFSL compliance and simply will not do them as they currently don't.
    And guess how many accountants have ever been pulled up by ASIC, ATO, ICAA, etc for non AFSL compliance on structural advice such as setting up SMSF pensions, death benefit nominations, specific SMSF contributions, etc.
    NIL is the exact number of accounts ever pulled up for non AFSL compliance on structural advice.
    How are Financial Advisers ever meant to compete without a level playing field and the heavy AFSL compliance we must do?
    Not to mention that my accounting partners in our joint venture have learnt all my SMSF strategy techniques over the last 11 years and will simply be able to take this knowledge to apply with nil compensation.
    Yep i'm stoked. NOT!!

  • david m on 28/11/2012 12:02:21 PM

    What an absolute joke. The RG 146 requirements are not exactly taxing. If an Accountant want to provide advice they should be at least rg 146 compliant. What's going to happen is there will be 1000's of accountants giving verbal advice to their clients..the shit will hit the fan and we will all pay for it with over regulation

  • Grant Simpson on 28/11/2012 11:51:20 AM

    As a financial planner, the thought of 10000 new accountnat competitors is initially daunting. In reality though, the need to meet 947D (switching advice via an SOA and requirements for product analysis of exited fund), and 961B (Best Interests test, need to demonstrate knowledge of the "personal" as opposed to "tax" position of the client, including Centrelink considerations etc etc) mean many accountants may decide its too hard to meet the paperwork requirements. As such, referral arrangements, transferrring the paperwork obligation, are likely to more the norm. Time will tell.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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