In these letters, ASIC quotes text from the website of the accounting firm and highlights particular terms such as SMSF set up and assistance which may suggest the firm is carrying on a financial services business when they are not licensed to do so.
The letter requests that the accounting firm provide ASIC with a written statement within 14 days outlining the details of SMSF-related services they provide clients.
Where the accountant feels they don’t need to be licensed, the letter asks the firm to provide a basis for this view.
“They suggest the accountant attach any legal advice they may have obtained to support this view,” Merit Wealth accountants services director David Moss, told SMSF Adviser.
Alternatively, if the accountant believes they need to get licensed, the letter asks the accountant to outline the steps they are taking to achieve this.
“The scary thing with this document is that it’s asking for a confirmation from the accountant in writing, if they believe they need to get licensed or not,” said Mr Moss.
While ASIC has the ability to impose fines of thousands of dollars on firms that advertise services they aren’t legally able to provide, he said it’s unclear at this stage if ASIC will go down this path with accountants.
“People shouldn’t ignore these letters. They need to act – the letter provides a two-week period to respond to ASIC. They’re not mucking around. You can’t put your head in the sand,” he warned.
“If someone doesn’t know where they stand, then they need to get some guidance and advice off other people as to what their options are and how they could proceed.”
Hayes Knight director and chair of Knowledge Shop, Greg Hayes said in some cases accounting firms may simply have not updated their website material to reflect the changes in the law.
“Some public pieces of information such as websites in some cases just haven’t been brought into line with the changes that are occurring. I think in the vast majority of cases it’s not deliberate intent,” said Mr Hayes.
“It’s one of those things that have been overlooked with the changes, [and these firms may] just have a website with a bit of updating to be done.”
This latest action from the corporate regulator follows an announcement by ASIC chairman Greg Medcraft earlier this year that ASIC would be using a machine learning software to search the web and identify misleading marketing, in particular sub-sectors, including unlicensed accountants and SMSFs.
It also follows a research program in which ASIC has investigated hundreds of SMSFs at random, on the lookout for tax agents who unlawfully provide SMSF advice.
It is good to see that ASIC are acting on their regulations. For those of us that have gone down the path of registration it is good that ASIC are supporting us. I chose to become an authorised representative of the SMSF Expert and they provide all the training and SOA’s in a timely manner. We all have to keep up to date with current legislation. We cannot suggest to clients to set up an SMSF without going through proper procedure. We cannot even suggest they put extra money away without looking at the whole picture. To provide Factual information is not giving an opinion and that is what my client want from me.
Guys, claiming it’s execution only or ‘pure client instruction’ is crazy ! Are you mad? Those ASIC 216 provisions are just there so unlicensed accountants can implement the advice of a licensed adviser. e.g. an unlicensed accountant who is working with a licensed colleague or who licensed referral partner.
GeorgeVC and David Moss: Be careful!
Whilst it can technically be legal to carry out SMSF admin as execution only or under pure client instruction, with no licensed adviser involved, this approach is only safe in very limited circumstances.
if you implement something like a rollover to an SMSF or an SMSF pension without an SOA from a licensed adviser then you must be aware that it’s easy for your client to sue you down the track if they subsequently incur market losses and want someone to blame.
If you didn’t [i]actually [/i]refer them to a licensed adviser to get advice, then your disclaimers won’t count for much.
ASIC appear to be enforcing the rules. As a regulator, it is hard to blame them for doing that. The bigger problem are organisations like CPA Australia who totally failed to understand the needs of their members. As a result, instead of establishing a working model which may have allowed CPA’s to setup SMSF’s without a licence, they setup an ill-conceived CPA financial planning arm that, as I understand it, is a total failure and has squandered millions of dollars of member funds.
Excellent point GeorgeVC. Below for those interested
http://www.asic.gov.au/for-finance-professionals/afs-licensees/applying-for-and-managing-an-afs-licence/limited-financial-services/afs-licensing-requirements-for-accountants-who-provide-smsf-services/
It’s called upholding the law Barry. You wouldn’t like it if thousands of people called themselves accountants without doing the training and just started giving tax advice.
If you don’t like the actual law you should have objected about 4 years ago.
Barry well said, just wait when they roll out G5!
Good work from ASIC to police the laws that have been put in place. For too long accountants have been breaking the law (or should that be braking, Barry?) and need to get their house in order. Everyone knows that most accountants have long turned a blind eye to the need for licensing and hidden behind the provision of “factual information”. Clients think they are getting advice from their “trusted adviser” which is all that will matter to ASIC and the judge.
May I suggest to Accountants that if you receive such a request, you frame your reply using ASIC’s own INFO 216 Information Guide. It very clearly spells out what SMSF services an unlicensed accountant can still provide, including establishing and winding up an SMSF, provided you are not providing a recommendation or giving a statement of opinion and you provide adequate disclaimers. The examples in ASIC’s guide clearly state that an unlicensed accountant can advise clients on the necessary steps and compliance processes that are required to set up or wind up an SMSF, and assist in the implementation of those steps if requested to to do so. I think that pretty much describes what accountants have always done and most would agree.
As an accountant, if ASIC write to you, I wouldn’t bother with supplying them with a legal opinion on why your practice doesn’t need to be licensed. I’m sure ASIC already spent lots of money on legal fees developing their position paper INFO 216….just send them a copy!
Outrageous, bloody accountants lock them all up as they are the worst criminals in the country. Oh and what about CBA and its Directors – nothing I guess
Just one big witch hunt. I wonder if it will get to the stage that to purchase any product or obtain information on a product in Australia whether it be over the counter or by phone a salesman will need a licence to open his mouth.
This witch hunt against SMSF accountants has highlighted just how ridiculous the political correctness has reached in Australia today as the bureaucrats push on with putting the breaks on SMSF’s.