Speaking on a panel discussion on the Quality of Advice Review, BT head of financial literacy and advocacy Bryan Ashenden noted that a number of the accounting bodies have made submissions calling for legislative changes to enable accountants to be able to provide certain types of strategic advice — including SMSF advice.
“The IPA submission talked about how the limited licensing regime was badly designed from the start and required a lot of accountants to [meet new requirements] with arguably with not a lot in return,” explained Mr Ashenden.
“I note that the IPA, together with Chartered Accountants ANZ and the SMSF Association have made a separate submission in relation to the limited licensing rate and gave an overview of a potential model that could replace it.”
IPA group executive, advocacy and policy, Vicki Stylianou explained that under the proposal, accountants with certain qualifications could be taken out of the financial advice regime and put in the tax regime under the Tax Agent Services Act.
“[It would mean] that where you’ve got [a] professional practice certificate and everything that involves, and you’ve done additional qualifications in superannuation and SMSFs, then you would be able to give advice to your clients in the ordinary course of your tax agent services in terms of setting up an SMSF and advising a client to set-up, winding funds up, pensions, and contributions,” she explained.
“Essentially, we would be redefining what a tax agent service is under section 90-5 of the Tax Agent Services Act to say that, if you give this type of advice in these circumstances.”
Commenting on the proposal, Allens partner and the independent reviewer appointed to lead the Quality of Advice Review, Michelle Levy, said she had concerns about creating exceptions for particular professionals within the advice regime.
“I have the concluded view that I don’t like exceptions. I think they are inconsistent with a principles-based approach, which is what I am preferring,” Ms Levy stated.
“I worry about creating exceptions, and I think there needs to be a very compelling reason to do that.”
Ms Levy was also questioned on whether she would consider separating strategic advice from product advice and allowing advisers to provide advice with reduced compliance requirements where the advice is solely focused on strategy.
Mr Ashenden explained that one of the key concerns for financial advisers was separating strategy from product.
“As an example, if I want to talk about superannuation then am I starting to talk about a class or product and therefore, I will be captured under the licensed advice regime? If I’m talking about an SMSF, it may be a product that doesn’t even exist yet because the fund hasn’t been set up.”
Some advisers and industry groups have raised the idea of uncoupling the strategic advice from product advice and allowing that advice to be delivered with less disclaimers and shorter statements of advice.
Ms Levy said she wasn’t sure that segmenting advice into different types would be helpful.
“Rather than segmenting, in my view, the regime needs to be broader, not narrower. The way I think about this is that it should be easier to give financial advice whether that includes strategic advice, product recommendations or credit advice,” said Mr Levy.
“It seems to me to be a very bizarre world where you can speak about credit under one regime and superannuation interest under a separate regime.
“My hope is that my recommendations deal with that as a whole. In my view, what is required by the adviser should adjust according to what you are specifically advising on. If we move to a more principles-based regime, then I think that it’s easier for the law to respond and puts the responsibility on the industry. The question is to what extent the industry is ready for a more principles-based approach.”
“I don’t think there should be a different regime for strategy advice from a product recommendation.”
Accountants had their crack and failed.
What is needed is carve out for Registered Licensed Financial Planners that incur jail times, fines and penalties for inappropriate advice and spelling mistakes in a Fee Disclosure Statements. We don’t need carve outs for un- regulated Accountants that just want to sell a $4,000 SMSF along with the fries and thickshake at the end of the annual 15 minute tax return meeting, …claim they “know the client well” because of the data feed from the ATO and are already so unregulated already they give stock tips every single day now, and can get a years worth of CPD points by reading the Sydney Morning Herald at the start of the financial year.
No one is mentioning carve out for actual Human Advisers…where the hell are our Associations???….too busy working on Carve outs for their major client AwareSuper.
and accountants don’t need to disclose their “kick backs” that they are receiving to assist people with investments in their SMSF’s
If only all of these excellent comments were passed on to the QAR, they (the lawyer Michelle Levy – “which is what I am preferring”,) might for once receive some direct input from the advisers that actually provide the advice. And why is the QAR result determined by 1 sole Lawyer? rather than an Industry represented Committee with real advisers on it?
The number of SMSF messes I have had to clear up is incredible. I have seen SMSFs where they have remained in cash for years on end because the accountant didn’t recommend investment options. Mostly this was because they either thought markets were too risky or weren’t qualified to make investment recommendations. By all means allow accountants to give advice but make them go out and get qualified to do so just like the rest of us!
exactly. I have one now where they have a SMSF for a property, but also other super outside of this. When I questioned the accountant, her response was “you can’t get better returns than a super fund”.
Let’s hope this common sense thinking from Michelle plays out. Personally I feel it would be the ultimate slap in the face after all we’ve been through if carve outs were given to everyone else owning a calculator to be able to provide forms of advice without the same bs we have to go through
accountants were doing this for ever and a day until insurance salemen wanted to profess their exclusive intellectual dominence. Now insurance salesmen are tax agents giving tax advice by university trained accountants have to default to them. Its a comedy and clear to see who is shaping the narrative.
You are correct, accountants have been giving terrible unlicensed advice for years. Olive’s, trees etc anyone?
Same topic of advice = same duty to client = same obligation = same regulation
Did I hear someone say ‘mango lot’ ?
Accountants and their carve outs can jog on.
Well hardly surprising that someone with a financial interest in her institutional clients not having their market share fritted away with people moving into SMSF doesn’t want it made any easier to move out of APRA funds.
Big end of town using their power to manipulate the masses.
Giving advice on the operation of a company, trust, SMSF is not financial advice.
Apparently providing advice by a trained professional, who just doesn’t happen to flog product and have an AFSL accordingly, is not good enough, but advice by a computer is OK.
FSC and instos rule !!
Even without Josh.
SMSF’s recommended by accountants is the biggest product flog going around. 9 times out of 10 I meet a client with a SMSF they have no need for one, don’t understand much about why it was set up and whether it is appropriate. Giving accountants more freedom to ram SMSF’s down every clients throat is a ridiculous idea.
You are right. Advice about tax and operational matters of SMSFs should not be regarded as financial advice.
However recommendations to set up an SMSF in preference to using a public offer fund most definitely is financial advice. It requires understanding of the relative merits of available products, understanding of the clients situation and requirements, and an impartial assessment of where the client’s best interest lies. Accountants routinely give financial advice recommending the establishment of SMSFs. 9 times out of 10 it is conflicted, inappropriate, undocumented, and illegal. Rather than Levy doing more to enable it, ASIC should be doing more to stop it.
Again with encounter this lunacy of exemptions, exceptions, work arounds etc. Let’s go for simplicity.
To provide advice everyone needs to have the same qualifications and training.
No exceptions, no carve outs.
Totally Agree
To give Tax Advice you must be educationally qualified and registered with the Tax Agents Board
To give Financial Advice you must be educationally qualified and registered with ASIC
To give Medical Advice you must be educationally qualified and registered with the Medical Board
To give Legal Advice you must be educationally qualified and registered with the Law Institute
So why on earth do some people think that “Accountants” are some extraordinarily specially gifted creature or some sort of “Oracle of All Things Financial” when they have NOT studied and passed the same specialised education that “Licenced Financial Advisers” are required to pass.
If accountants want to be Financial Advisers as well as Accountants, then do the study and pay for the extra licencing…..end of story….period.
Levy’s comments re broadening the regime to include credit advice are sensible and encouraging. It’s quite ridiculous that strategic credit advice requires a separate credit licence and is covered by a different regulatory regime.
Retain separate licensing and regulation for mortgage broking if need be, but strategic credit advice should be brought within the scope of financial adviser licensing and regulation where it more naturally fits.