The latest figures issued to ifa’s sister publication SMSF Adviser by the regulator indicate ASIC has received 276 applications for limited licences as of 28 January 2016 and approved 88 limited AFSLs.
The number of limited licence applications submitted to ASIC has increased by 72, up from 204 as reported by SMSF Adviser last year, while the number of approved applications has risen by 10.
SMSF Association head of education Liz Ward said accountants have repeatedly been warned by ASIC that 31 March is the effective cut-off date for those accountants who want limited licences.
“After this date, the regulator is giving no guarantees that there will be sufficient time for accountants to meet the necessary requirements involved in getting an AFS licence,” said Ms Ward.
“Across the industry there is concern and, to some degree, bewilderment about what the thousands of accountants who now advise SMSFs are going to do after 30 June.”
If accountants are not operating under an AFS licence, whether full or limited, or have not established a referral arrangement or joint venture with a party that has an appropriate AFSL, Ms Ward said, they will effectively only be able to provide tax advice to their SMSF clients.
She also warned accountants who are expecting the deadline to be extended that they will be “sorely disappointed”.
“If you haven’t got your plans well underway by now, you have a problem,” she said.
Accountants know they don’t have to worry about this because ASIC has always turned a blind eye to their activity, while strangling the life out of financial planners. ASIC’s view is that consumers are better off with conflicted, inappropriate, ill informed, undocumented advice from an accountant, than with any sort of advice from financial planners.
Accountant SMSF licensing is just ASIC pretending to be even handed. No-one expects them to actually enforce it.
The law is in and the deadline looming.
Importantly, getting your own license is just one way for accountants to satisfy the new law. I believe the easier and more productive way is to join a licensee that can authorise them and support them in this new era of advice.
Accountants are living in la la land. It has never actually dawned on them how lucky they are. They were given an exemption from the FSR laws for the last 15 years. It was always supposed to be temporary and they are lucky it was put in the too hard basket for so long. It was never the Government’s intention for accountants to be allowed to give unlicensed, undocumented (and in many cases very poor) financial advice without any relevant qualifications or training and limited recourse for those who are adversely affected. It is time for all accountants to put the violin away and get to work on getting professionally licensed. They will find no sympathy on a financial planning forum like this!
Disappointed Accountant, Reality has said what I was looking to say so much better.
There are numerous AFSLs who are providing RG146 courses over 2 or 3 days that will allow accountants to able to get a limited licence. So the requirements are not overly burdensome to get the qualification initially.
The biggest issue that accountants will face is documenting the advice they give. In my experience accountants rarely put their advice in writing. I was in a meeting with one of the partners at a large firm I worked for. He was giving the client some quite complex advice. After the client left I asked him if he would now document that and give it to the client? His answer was “Hell No! You can get sued doing that.” Given that the concepts were reasonably complex for the client to grasp, I asked what happened if it was implemented wrongly? “I just tell them that they misunderstood what I said…”
@Dissappointed and Reality
You are both correct of sorts and to a point.
Planners can advise only on taxation consequences as a result of their financial planning advice but they cannot charge for or “do tax work”. The CPD requirements for this allowance is laughable. i.e. too much for next to nothing.
Similarly on licencing side the volume of work, complexity and costs put on accountants is more ill thought through legislation from the government now in opposition.
Nevertheless limited licencing does NOT allow an “accountant to advise on basically everything a financial planner does”. They can do class of product only eg 20% domestic, 30% int’l equities etc but not security level, which share, ETF or managed fund unless they opt for a full licence.
I have met lots of bright people from both professions, I have never met ONE that was really good at both, I don’t think it’s possible. You will let your clients down in some respect, so just do one option (accounting or planning) or have a good referral option in place and do both that way.
The biggest issue for the accountants is managing the risk if they opt out and “just provide the facts” which I’m sure is a temptation for many.
They can be deemed to be giving advice if things don’t go swimmingly and then be accused by ASIC of giving unlicensed advice which is a very serious offence that can and does result in court action.
Damned if they do and damned if they don’t. It’s not fair and reasonable but it is a reality that needs to be managed.
Hello, accountants shouldn’t have been giving all the AFSL required advice that they were giving with zero AFSL compliance.
Now they are being asked to play on the same AFSL compliance field as financial advisers they realise it’s an absolute bucket load of work. And far from a free gravy train.
And guess what they are actually too busy being accountants and doing a good job at that rather than try to do another full time financial advice job too.
So accountants will generally choose to stick to doing accountant work, SMSF accounts / admin etc as they should have been and partner with a full time financial adviser.
And for those either super smart enough (or stupid enough) to do 2 full time jobs, I say good luck to you 🙂
@Disappointed Accountant
I see where you are coming from but all the TPB tax adviser allows you to do is essentially consider tax law for financial planning strategies. Doesn’t allow a financial planner to do a clients tax return etc like licensing allows an Accountant to advise on everything a Financial Planner does.
I personally don’t think it is comparable. TPB doesn’t allow an adviser to be an Accountant but licensing allows an accountant to advise on basically everything a financial planner does.
@Jimmy Neutron – you obviously see no difference in the qualifications required to be TPB tax (financial) advisers. You are capable of using ‘3 years work experience’ as acceptable to get this label – provided a third party puts that on letterhead. I don’t see that happening for accountants who have been doing this for over 10-25 years! Or do I misunderstand the requirements for tax (financial) advisers?
Most financial planners have opted to be licensed under the TPB’s Tax (Financial Adviser) Practitioner option, bringing them into line with the requirements of the system both in terms of initial and ongoing education and CPD requirements. By most comments on these topics from accountants around limited licensing, I couldn’t say the same for accountants. Most seem to keep stating that they’ve been giving advice for years and why should they change now?
I suppose this whole enforcement on Accountants but nothing has been done about Financial planners who provide ‘tax advice’ is a sore point … So I wonder why accountants are not rushing!
Has anybody considered the fact that many accountants wont bother because they wont be interested in doing the work?