In a submission to the Quality of Advice Review: Proposals for Reform paper, the SMSF Association said changing the advice model to enable accountants to provide simple types of advice could help facilitate the provision of limited advice.
The submission noted that the current education standards will result in very few accountants seeking to become licensed.
“The limited licensing regime in its current format is an obsolete model and will disappear in time as accountants continue to exit,” the association warned.
“Most accountants do not seek to provide financial product advice. Rather, they wish to provide advice that is within the realms of what many clients expect to be in the ordinary course of a tax agent service.”
The Association noted that with the declining number of financial advisers and the unmet advice needs in the community, accountants have a valuable role to play.
“Suitably qualified accountants should be able to provide certain limited advice, that does not involve a specific recommendation to acquire a financial product,” it explained.
For example, accountants should be able to provide simple advice on superannuation contributions that extends beyond the provision of factual information and how a type of contribution is treated for income tax purposes from the perspective of the party making the contribution and/or the super fund receiving it.”
In terms of the proposal to change superannuation trustee obligations and remove the restriction on collective charging, the association said caution is required when making amendments to the sole purpose test section 62 of the SISA.
“We acknowledge that superannuation fund trustees now have an obligation to provide information to certain members under the retirement income covenant and the issues this has created,” it stated.
“The superannuation legislation has existing mechanisms to address the allocation of costs and charging of fees to members. Superannuation Industry (Supervision) Regulation 1994 5.02(3) requires that costs are to be distributed in a fair and reasonable basis.”
Collective charging, it said, should apply only where it is in relation to the trustee discharging their duties under the retirement income covenant and for the provision of factual information to members.
“Where specific advice is provided to a member, no matter how simple or complex, the fee for the service provided should be deducted from the member’s interest in the fund, or nominated interest where they have more than one superannuation interest with that trustee,” it said.
“Expanding the collective charging of fees for the provision of personal financial advice allows for the cross subsidisation of advice services accessed by some but not all members of the fund. This is not equitable and is not fair or reasonable.”
The SMSF Association is looking for new members.
Accountants already tell people to buy BHP shares, set up a SMSF, explain Bitcoin, recommend pensions starting and love talking the stock market…..I don’t think they need encouragement. An important lesson I learned after working in an Accounting firm is if there are no file notes, no consumer protection documents it never happened. The benefits of being a so called “professional” is zero regulation.
There is a good argument that tax agents should be able to provide advice around super contributions etc without the need for an AFSL. They should not be able to recommend a SMSF though without being licencesd as this is more than simply a “structure” for tax planning.
The real issue is around the very wide definition of what constitutes a financial product. This is rooted in the history of the advice industry when what planners did and how they got paid was somewhat different.
The QAR is a good attempt to try and fix this.
I wont have an issue as long as its a level playing field – for accountants, lawyers and planners. You need to provide advice that is in the clients interests first and foremost (a fudiciary duty to the client) AND be appropriately qualified, competent to provide advice in the area and have the same compliance and paperwork requirements whatever professional area you occupy.
Temporary carve-outs seldom work, look at the current SMSF-only licensing, as soon as an appropriate investment strategy and philosophy is considered, it’s crossing the line. Many accountants made the call to give up their limited licensing and just verbalised the whole lot. I’ve also seen some dreadful outcomes following this “advice”. I agree with you though, the requirements should be the same for advisers and accountants, and mortgage brokers and lawyers too.
I feel it’s both divisive and not sensible advocacy from the SMSF Association given Levy went into depth about why she felt a further lessening of requirements for Accountants was unwise back in July. I think it would be more effective to have a consolidated voice on the points of agreement, so changes can be effected asap https://www.ifa.com.au/news/31555-michelle-levy-flags-concerns-about-accountants-advice-proposal
Accountants shouldn’t be treated any differently to licensed Advisers and need to meet FASEA and the same education and professional standards.
…lest the aim of the SMSForg is to alienate 50% of their non-accounting membership.
Completely agreed – but unlikely.