Limited licensing should be phased out and replaced with a new advice framework to better cater to the needs of self-managed super fund trustees, according to the SMSF Association.
In its 2020-21 budget submission, the association argued that the current overarching regulatory framework regulating professionals who deal with SMSFs is complicated, inefficient and able to be worked around.
SMSF Association chief executive John Maroney said limited licensing prevents SMSF trustees from getting basic SMSF advice without incurring a significant cost.
As a result, he called on the government to transition the “defunct” limited licence to a new consumer-centric framework that raises advice standards and rectifies the advice gap to allow appropriately qualified SMSF advisers to provide low-cost, simple advice.
“If an SMSF trustee wants to seek advice regarding the establishment of a pension from their accountant, unlicensed accountants are unable to provide this simple advice. Licensed advisers can provide this simple advice, but it involves costly documentation disproportionate to the advice sought,” Mr Maroney said.
“The desired policy outcomes from introducing limited licensing have not been achieved. Individuals have unmet needs, advisers face high regulatory costs and accountants are strangled by regulation.
“What we’re proposing is a new consumer-centric advice framework with improved SMSF advice a critical element of this project.
“The ultimate goal is to advocate for reform that reduces complexity, improves efficiency and drives harmonisation to better enable the provision of affordable, accessible and quality advice to business and consumers.”
The SMSF Association also requested in its submission for the Australian Taxation Office to allow greater access to its portal.
Further, the association proposed a spousal rollover, increased contribution flexibility and simplifying superannuation complexity around thresholds, residency rules, death benefits and legacy pensions.
Mr Maroney said that, currently, only registered tax agents are able to access its portal to get total superannuation balance (TSB) and transfer balance cap (TBC) information that is crucial for SMSF advice.
“Ironically, these individuals are generally not able to provide SMSF advice as they are not licensed with ASIC. Incongruously, those licensed advisers who can provide SMSF advice (such as financial advisers) have no reasonable way of sourcing ATO portal information directly from the ATO as they are not, generally, the member’s personal tax agent,” Mr Maroney said.
“There is a fundamental lack of information for SMSF advisers who need to provide timely advice based on myriad of complex caps, thresholds and balances. Accountants can get information but cannot provide advice and financial advisers are unable to get information but are the individuals able to provide advice. This jeopardises the quality of advice being provided to members.
“The move to open data and increased access to the ATO portal is an essential next step for the $750 billion SMSF industry and the only means by which the sector can institute commercially viable operational surveillance to the standard the ATO rightly requires, and we encourage the government to make this an ATO priority project.”
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