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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