Speaking to ifa, IPA executive general manager for leadership Vicki Stylianou said that to her knowledge, fewer than 50 ‘limited licences’ have so far been approved by ASIC.
The new regime – which will replace the so-called ‘accountants’ exemption’ – is set to commence on 1 July 2016, but many in the accounting community have left the application process too late, according to Ms Stylianou.
“More than 90 accountants have applied, but ASIC has rejected a lot of them because their applications aren’t complete,” she said.
While there could be a flood of successful applications as the 1 July 2016 deadline approaches, Ms Stylianou said it is looking more likely accountants will be forced to refer their SMSF work to financial planners.
“There are going to be a lot who are going to be relying on a referral system whether they like it or not,” she said.
The IPA has a referral arrangement in place with AXA/AMP, BT dealer group Securitor, independently-owned licensee Capstone Financial Planning and IOOF-owned Shadforth.
Some CAs that I know are completing the Diploma in Financial Services (Financial Planning) and will all be looking at full licenses. Accountants are in a unique and strong position (ie. they are already self-regulatory and a recognised profession) to ‘takeover’ the strategic advice role from financial planners if they play their cards right over the next few years. It’s just working through the compliance issues. In fact accountants have to find other work anyway as compliance accounting and taxation work is decreasing for them. So while financial advisers, licensees and professional associations argue among themselves, so in the background accountants and their professional associations are quietly working towards adding financial planning strategic advice to their offering. In the early 1960s accountants beat engineers for dominion over cost accounting. The engineers lost. Besides, the public are also more likely to trust their accountant than a financial adviser.
GeorgeVC, perhaps you are doing a good job, full credit to you, but at least 7 out of 10 SMSF’s I see weren’t set up by intelligent people wanting control and to make their own decisions, but by accountants, with the trustees having little to no comprehension of what the requirements and responsibilities are, not any interest in or expertise about investing. Most I see hold cash and term deposits only, as the accountant has advised the set up, but nothing more, not even a referral to a planner to invest, and so the money, often hundreds of thousands sits their, not even always in higher interest accounts or term deposits, sometimes just in cash…
GeorgeVC, I am not at all concerned about those consumers who choose to DIY. Taking an active interest in ones super is a very good thing. But for those who want advice from a ‘SMSF specialist’, I think it is fair and reasonable for the consumer to expect that person has the appropriate qualifications and licence to back up their advice. If an accountant recommends a client start up a SMSF, then the client should equally expect the accountant has been properly trained and licensed. You can’t complete the tax return and deny any responsibility for the other advice you provide. Australian consumers deserve better than that.
I appreciate your comment Ben, but consider the more than 90% of SMSF trustees out there that dont use an FP. They are intelligent people, who know what they want to do and invest in, thats why they have a smsf. What they do want is factual advice and guidance on the many taxation and compliance rules and are smart enough to use that information and make their own decisions. If you think that is all too risky for them, then you are just being patronising. They also want to consume guidance on investments, insurance, estate planning which Accountants have no interest in providing, thats all for you if you would embrace it, but FPs just seem to want to swallow them whole. Maybe that is something to do with they way you charge, p.s. far be in from me to criticise, but flaunting your “license” like most FPs do in this argument is not what this is about. With decades as an accountant and mostly an smsf specialist I don’t consider myself “untrained”, and my morals are fine thanks 🙂
GeorgeVC, if you are untrained and unlicensed to provide financial advice, you should not have been doing so. Whether there was an accounting exemption or not, it is morally wrong to provide advice which is outside of your expertise. There are a very large number of accountants who have been taking advantage of this loophole and multiplying their profits by driving clients into self-managed super funds which in most cases are unsuitable, dangerous and risky for the average client. Perhaps the accounting profession can help in a positive way by driving change to reduce the complexity and cost of delivering advice in the future. But burying ones head in the sand and hiding under the guise of ‘factual advice’ and ‘execution only’ transactions will only lead to more client losses and greater scrutiny of the accounting profession.
Vicki,
The majority of accountants are seeking to become authorised representatives under existing licence holders.
The limited licence option was never a practical or cost effective solution.
Accountants certainly will not be referring their existing SMSF Work to financial planners
I fully agree with George. Our professesional body CPA Australia should have fought hard to maintain the
accountant exemption. I and our CPA discussion group will lobby and advocate the abolition of this legislation after expiry of the current government. The outcome of 1/7/2016
will just be an extra cost to SMSF who will pay the SOA
to financial planners or could resort to Execution only
for accountants .
Dont you worry about us Accountants Vicki, we know exactly what we are doing, and wont enter this inefficient and unprofitable regulatory regime until forced to. The expense of full due-dilligence and SOA processes under a limited licence isnt justifiable when we legally or “factually” provide most of it anyway. Its not an opportunity, its regulation we dont need. I dont expect a last minute rush either. Many many accountants are now up in arms against their accounting bodies for the support they have given to these changes, when they should have been lobbying against them and self regulating, as is our way.
Post 1 July 2016, most accountants will likely remain unlicencsed and continue to dispense “factual” advice & “execution only” services. The accounting bodies will then be pushed very hard by us post 2016 to defend their members against what is “factual advice” against the regulators. Thats probably when we will see sensible legislative amendments to restore common sense.