Allowing accountants to gain limited AFSLs will create thousands of “backyard administrators”, putting client funds at serious risk.
This is the assessment of Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston, who has expressed serious concerns regarding the impact that allowing up to 10,000 accountants to broaden the scope of financial advice that they are allowed to give will have on SMSF trustees.
Johnston is concerned that the proposed legislation would create thousands of “mini administrators" providing SMSF services to clients, making the regulators’ job nigh-on impossible.
“Considering the public do not have any protection against fraud in the non-APRA regulated space, how are the ATO and ASIC going to cope over 20,000 mini ‘backyard’ administrators, and over 500,000 individual funds out there in consumer land to regulate?” he told Wealth Professional.
“Let’s not forget that the Trio fraud occurred in an environment of less than 100 corporate administrators, how are the regulators going to cope with 20,000 of them?”
He also believes that SMSF promoters are “scaled and dumbed down” versions of product manufacturers and industry funds trying to convince consumers to buy into their own in house service
“It seems that the natural self-interest and conflicts of interest characteristics of humans are being overlooked with SMSF products," he said.
"Considering a significant number of SMSF structures are sold for the wrong reasons – low account balances or for fees with no investment advice – this latest development can only exacerbate the situation with consumers being at further risk.”
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Shorten reveals accountant’s exemption replacement