Merit Wealth accountants services director David Moss says when clients are in the process of entering limited recourse borrowing arrangements, the bank will usually ask the accountant or adviser to sign a certificate which states they have given the client financial advice.
While unlicensed accountants may be able to sign off on certain certificates because of the way the certificate has been worded, there are plenty that could place unlicensed accountants at risk of providing unlicensed advice.
“Some of these certificates say, ‘I have given you financial advice’ and you’d be breaking the law by signing that document if you weren’t licensed,” Mr Moss said.
He warned that even licensed accountants need to be checking for any “tricks and problems” associated with the wording of these documents.
“With some of these certificates, you’ll need to do a statement of advice for the loan simply because in the wording of the document it says ‘I have given you advice and provided you with a statement of advice’”.
“So if you’re signing documents saying that you have provided a statement of advice, then you better give a statement of advice.”
The difference being an accountant that is not licensed to provide whether an LRBA loan was suitable for the SMSF. Under the new regime if an SOA is provided by a licenced accountant or a financial planner then there would be no need for any post-approval financial advice. The only independent advice required would need to come from a solicitor to ensure the SMSF understood its obligations under the bank’s loan contract
This topic is a little confusing. No accountant operating under my license, or a limited license can give Credit Advice as they are not authorised, or licensed to provide credit advice, nor it would be possible for most financial planners. Further, as credit is not a financial product an SoA is not required at any rate.
It is a badly written article. They mean financial advice, not credit advice although I understand the confusion…
Basically they want someone to sign off to say that this strategy is suitable after considering the client’s overall financial situation (and providing an SOA to prove this is the case) and not just a lender/broker to provide general advice saying “this lending is not unsuitable based on the info we have on file”.
Unless an Accountant is licensed as a planner, they cant provide the SOA to prove this. If I had a dollar for every time I had an Accountant or Mortgage Broker ask me to sign a ‘financial advice certificate’ when I haven’t provided the client advice I would be a rich man. Obviously I refuse to do so as that would be me taking on all the risk without actually confirming it is suitable.
I beg to differ. The banks want to make sure that the borrower understands their obligations. There have been too many case where banks have been found wanting especially when guarantees are involved. They require the borrower to see a solicitor or accountant to EXPLAIN to them the terms and conditions. As far as I can see this is not financial advice: it is simply an exercise to make sure that the borrower is cl;ear on what he/she is doing. If it was financial advice would solicitors have to be licensed?