The federal government’s incoming education requirements for financial advisers, including accountants operating under a limited AFSL, allow transitional pathways to compliance for most existing advisers. These pathways still involve expensive bridging courses, but are a significantly easier and cheaper option than starting from scratch.
To be eligible for the transitional arrangements, advisers and accountants need to be authorised under an AFSL before January next year, meaning CPA Advice’s authorised representatives have about five months to select and be accepted by a new dealer group.
“This is certainly an issue for the incoming FASEA requirements,” Licensing for Accountants chief executive Kath Bowler told SMSF Adviser.
“They would need to find a new home before 31 December to ensure they are licensed on 1 January – and therefore qualify for any grandfathering provisions. While FASEA could be lenient, they have not been lenient on anything yet, so can’t imagine they would be keen to make an exception here for only 30-odd advisers,” she said.
What next?
Becoming an authorised representative is not as arduous as becoming self-licensed, but affected professionals are advised to start looking for a new licensee soon. This is particularly urgent for accountants, who would unlikely qualify for their own licence in any case, and therefore don’t have any other option.
“Based on the guidance released by FASEA to date, it is likely that most accountants are going to qualify for the bridging course [options] as FASEA is indicating that a degree with a major in accounting will qualify. However, as most of them will have less than three years’ experience, they won’t be able to apply for their own licence and will need to find a new licensee. This can be done quite quickly, in a pinch, but I would also suggest they start looking immediately,” Jaime Lumsden-Kelly, solicitor at The Fold Legal, told SMSF Adviser.
CPA Advice’s authorised representatives may face hurdles in finding a dealer group that is willing to house them, particularly if they were only providing limited financial advice.
“To be honest, if they don’t have many planning clients, they are going to find it difficult to find a quality licensee who will want them, as occasional advice means a huge compliance risk for the dealer group,” Mayflower Consulting’s director, Sarah Penn, told SMSF Adviser.
“And, SMSFs are on the nose with ASIC too,” she added, referencing the fallout of the royal commission.
For over 18 months, Ms Bowler has been finding accountants are switching dealer groups, after realising the impact of a dealer group’s culture and compliance approach to their firm. To get their next move right, Ms Bowler recommends advisers and accountants providing SMSF advice consider:
– Whether an authorisation allows you to provide the advice you want to provide, such as advising on limited recourse borrowing arrangements.
– The cost, given “cheap and cheerful is not always best when it comes to licensing.”
– Whether the advice templates provide options for both simple and complex advice.
– If there is a clear cultural fit between the dealer group and your firm.
SMSF Adviser is awaiting comment from CPA Australia.
katarina.taurian@momentummedia.com.au
