ASIC deputy commissioner Greg Tanzer told the CPA National SMSF Conference that ASIC will be visiting small groups of accountants in each state to understand how they’re operating.
“We’re going to conduct targeted surveillance on some licensed accountants to assess whether they’re meeting their ongoing obligations when giving financial product advice in relation to SMSFs. We’re going to seek in particular to identify unlicensed conduct and to take appropriate action,” Mr Tanzer said at the conference yesterday.
“We have begun that program of surveillance. I won’t tell you if we’ve actually started visiting [accountants] but the planning is definitely under way.”
According to Mr Tanzer, ASIC will likely release the findings of its surveillance in a report towards the end of the financial year.
“From our perspective, the transparency of outcomes is quite important,” Mr Tanzer said.
The deputy commissioner said he does not believe there are large numbers of unlicensed accountants continuing to give advice.
“Some people, when they look at the 1,159 licenses having been applied for, say to me that there are a lot of accountants out there who are continuing to give advice on SMSFs and haven’t got a limited licence or haven’t become an authorised representative or haven’t taken out a full licence themselves. In a sense [they’re suggesting ]it’s like some form of passive resistance to the new regulatory regime,” he said.
“I don’t think that’s true. All I would say, is that I can’t imagine that anyone who comes from a professional background would want to join the club of deliberately [being] unlicensed advisers, because that is a club that has the property spruikers, the cold-calling scammers, and the offshore investment scammers.
“That’s the club that a person would be choosing to join, not some virtuous passive resistance.”
Which ones David?
Good to see that as the trusted professional you’re using the old “they’re doing it, so why shouldnt I” approach. I’ve never recommended forestry or agribusiness products to my clients. The overly large commissions were a turnoff not an incentive. I couldnt see the ‘investment’ offered anything but a tax deduction, which is a rubbish reason to invest just on its own. Especially as many investments were made with borrowed funds. I think that you’ll find that the vast majority of forestry sold was done by accountants, either under single issue licences given by the forestry groups or under their financial planning accreditation, but where their main business was that of an accountant.
Of course, no financial product recommended by financial planners ever went bust!
One of the reasons some accountants recommended forestry products were the huge commissions paid to them, they obviously thought that if the financial planners get such large payments why shouldn’t we.
David, I am definitely not saying the licensing system is perfect with my issue being that anyone who provides financial advice (ranging from Financial Planners, Accountants, Real Estate Sales people recommending the establishment of a SMSF, bank call centre staff, stock brokers, dodgy option marketing companies and industry fund call centre staff) should operate under the same rules as this maintains consistency, allows those that provide bad advice to be penalised and in an efficient market does not negatively hinder any business – though it does increase the cost to consumers.My concern with your statement, which I will openly admit I am not able to back up with any statistics, is that it is easier to sue a financial planner than an accountant and this would impact upon the “scandals”. I am a Financial Planner and if I am taken to FOS the simple fact is that I will loss the vast majority of the time, irrespective of the quality of the advice provided. I also know of accounting firms where a major business strategy was placing clients money into mortgage funds and no legal action was taken in these instances. The argument was that advice was not being provided but if you have cross directorships this is a fairly weak argument but the people involved did not wish to incur legal fees to see if this would be successful.In relation to ASIC they and their government overlords don’t know what happens in the real world with this being the major issue. For example I have previously been told by a Senator who is involved in ASIC oversight that accountants don’t advice their clients to set up SMSF’s.
Agree with everything you say, Scott, but I find it ironic that most of the large financial scandals of recent times have been perpetrated by licensed advisors.
Obviously licensing hasn’t protected the consumer to this point, so what makes anyone think licensing even more advisors will have any effect?
It seems to me ASIC are the ones who need to lift their game, because they have been asleep at the wheel for the last 10 years at least.
No different Louise from clients who have come to me and said their accountant has told them they have a ‘tax problem’ and the solution is to invest in a forestry ‘investment’….and ‘somehow their narrow investment advice is considered ever so important….’ When the many flaws in the plan were pointed out, the client still proceeds because the accountant has said ‘what would he know…’ Similar issues advising caution to clients participating in accountant arranged ‘property syndicates’ that have subsequently gone bust. But again the ‘trusted adviser’, the accountant has said ‘what would he know….he’s just a financial planner….’So don’t worry Louise, your expertise is readily recognisable to ASIC, you just need to ensure you are appropriately licensed to continue to exercise it. Perhaps accountants will soon gain an understanding of the complaints financial planners have expressed about over-regulation, compliance and draconian policy measures pushed by left wing nutjobs like Labor, the Greens, CHOICE and Union (Industry) Super Funds.
Do you really understand whats happened in relation to the introduction of the ‘limited tax agent’ (as you call it)? Does it allow me to actually complete tax returns? No. Does it allow me to provide tax advice? No. Does it allow me to say that income protection premiums are tax deductible? Yes. Does it allow me to say that if a client sells their shares in XYZ for a profit, that they will pay tax? Yes. So there’s no conspiracy against accountants as you suggest.
In contrast accountants have been able to advise on certain super products with no compliance, compared to other participants in the industry. I think that the abysmally low numbers of accountants getting licensed is simply accountants saying i know better than everyone else. They’re hiding behind a thin veneer of professionalism, in many cases, and holding themselves out as ‘the trusted’ adviser when in many instances they are simply concerned about their own bottom line and protecting the sacred cash cow that is SMSF for many accounting firms.
There is no lack of respect, ASIC are asking accountants to be licensed as a consumer safeguard. I maintain that if you give good advice and provide suitable documentation then you don’t have a problem, though you do have a higher cost of providing the advice which should impact on everyone equally.It is up to the individual accountant to make a decision and I really can’t understand the whole carry on by accountants, as all professions need to meet legal requirements to practice. A different issue however is whether the financial planning obligations in this country, which are now impacting on both accountants and financial planners, are designed to allow the provision of efficient advice.
Clearly financial advisors are held in much higher regard than accountants. Worse still the accounting professional bodies failed to defend their members when it came to the crunch. The bit that is annoying me the most now is that I have clients rolling in the door with commentary of ‘my financial planner reckons ……’ and somehow their narrow tax advice is considered ever so important. Don’t me wrong I have many happy professional relationships with financial planners – but the lack of respect for my expertise given by ASIC is nothing short of a professional humiliation which I do not think was deserved.
The abysmally low numbers of accountants who have achieved a licence just shows how this whole licencing exercise set the bar way to high for the majority of accountants to economically achieve. Either the ASIC is incompetent, or the levels were deliberately set too high on purpose to push accountants out of the SMSF space for the benefit of other parties.
All the attempted intimidation (and insults referring to accountants as scam artists) by the ASIC is not going to change the outcome by much.
How this disaster came about needs a full investigation with the responsible heads to roll.
After all, one of the “offsets’ was for financial planners to become “limited tax agents” 17k+ financial planners are now “limited tax agents” – no exams, no fee, etc etc and just all approved. Where is the justice and equity in that.
“I won’t tell you if we’ve actually started visiting [accountants]”.
Yes you are, why not just admit it?