IPA chief executive Andrew Conway said that since the accountants’ exemption was removed on 1 July 2016, some Australians have simply opted out of advice altogether which may ultimately place their financial future at risk.
“Simply, trusted accountants have been hamstrung, unable to respond to clients’ questions, particularly around superannuation,” said Mr Conway.
“The public rely on their annual interaction with their accountant to finalise their tax affairs and seek guidance on issues which unfortunately is now considered financial advice as part of this process.”
Mr Conway said without this guidance from accountants, many won’t receive financial advice for important matters such as retirement planning.
“Seventy per cent of the population and ninety five per cent of all businesses have a trusted accountant behind them and denying them access to any guidance is not in the public interest,” he said.
Mr Conway said that recently IPA members have been asking the accounting body to take the issue of the removal of ‘accountant’s exemption’ up with the government.
It also follows a similar announcement from BGL managing director Ron Lesh that he too is preparing to lobby government to reintroduce the accountants’ exemption, with the current regime “unworkable” in his view.
Mr Conway said the principle at play here is ensuring Australians have access to affordable financial advice.
“The capacity of an accountant to provide advice on self-managed superannuation funds has long been held as not being a systemic risk to the integrity of the financial services system,” he said.
“We will engage with members over the next week to inform our advocacy and representation to the Minister to ensure our views are heard. I would encourage any member of the IPA or any other practitioner to make contact with me if they wish to make their views known.”
Dear IPA, SMSF Advice is a dangerous exemption with no PI cover
The fact is the exemption allowed accountants to set up and close SMSF.
That’s all.
But no most accountants went way, way beyond this and provided bucket loads of AFSL advice with ZERO AFSL compliance.
No wonder is was modestly priced as it was completely illegal and lacking any of the time consuming and costly government rules and AFSL compliance.
I guess you and many accountants think setting up a SMSF is simple.
But when accountants do that they also often:
Advise clients to sign BDBN while signing deeds.
Advise clients and help them roll over existing Super to SMSF, whilst ignoring the lost Life insurances.
Then accountants advise them about making various contributions.
Followed by advising them to start pensions and also nominate or not nominate a reversionary benefiricary.
And folks, that is all ILLEGAL, zero AFSL compliance accountants advice.
But sure let’s go back to all that illegal advice way over stepping the exemption.
[quote=Veronica]I wonder how many SMSFs are going well under the guidance of an accountant compared the SMSFs run by full time Financial Planners????[/quote]A little after the GFC, I has a client who wanted to capital guarantee his Industry Based Super Fund balance. He was quoted an earning rate of about 1%. I suggested he set up an SMSF and just grab a term deposit at the bank with his funds and he was earning around 5% at that time. Not so bad. Not awesome, but better than leaving it in the hands of the “planners” manging his funds on his behalf.
Accountants should stick to what they are good at, and it is not providing SMSF technical or investment advice. This is evident from the fact that they have dominated this sector over the last 10-15 years & we have an asset allocation as follows: 25% sitting in cash accounts at next to zero rates; 30% sitting in the ‘Usual Suspects’ Aussie stocks, which has been a painful experience over the last 12 -18mths; Next to zero Bond Exposure and next to zero International equity exposure. These predominantly inexperienced trustees sat back as interested bystanders & watched the DOW increase by close to 400% since the GFC. Also a very low take up of TRIS, prior to the most recent changes, when they were one of the most tax effective strategies for the previous 10-15 years. Do you think this would be the case if these trustees were getting appropriate advice? Over the last 10-15 years many accountants have encouraged their clients to set up SMSF to clip the ticket on the SMSF admin & then cut the trustees loose (apart from attempting to complete the SMSF accounts in a compliant manner 10mths after the end of the financial year). And we haven’t even started on the paucity of technical advice. Now ATO announce that only 44,000 of the eligible SMSF reset their CGT bases given the introduction of the TBCs. Best Interest Duty???? Pleeeeease.
Given that the vast majority of accountants have never provided investment advice and do not want to, your examples are mostly irrelevant. Perhaps the asset mix is down to SMSF investors investing in what they are comfortable with rather then giving commissions to self-interested advisors.
Have to laugh at the total lack of self awareness when FP’s complain about accountants charging for setting up SMSF’s when the FP have no problems receiving trailing commissions even when the investment under performs. Seriously?
You can give advice as an accountant, just follow the law. The system should be the same irrespective of the “adviser” the client sees.
[quote=Peter M Townsend]How do I sign up?[/quote] Thank you, Mr Townsend, for your support. I know that you have been an advocate of change so let’s see if we can achieve it with the next government.
What’s with all the Anonymous people? Don’t you have the courage of your convictions?
I always put a name on comments, but sometimes they still come up as anonymous.
As a client who has no intention of enlisting an accredited adviser, I suggest a restricted exemption system whereby a client of a trusted accountant can nominate that accountant as an adviser to them and by so doing the client accepts ultimate responsibility for any action taken on WRITTEN advice from the nominated trusted accountant.
Dear Mr Conway, I am not a member of your organisation (I am a member of CAANZ) but I am totally prepared to sign up for the campaign. I was involved with the original FSRA campaign and I am so glad that you have started this: I really hope it gains momentum. I am convinced that we will have a new party, in government next year (this year??) and I have already made a note to contact my member of the federal government. Every day brings a new revelation about the behaviour of fund managers and there has to be a “circuit breaker” between these people and the consumers. Accountants are best placed, not to give financial advice, but to review proposals and tell the consumer just what they are signing. Let the battle begin!!
Vote in Labor and you enforce the lobbying activity of the Industry Funds (Union slush funds). And you know, their No1 target is SMSFs so, don’t think you can vote for change – they want to annihilate SMSFs.
A sensible debate needs to be had and, a recognition, by Accountants that they can have successful partnerships with Financial Planners that are in the best interest of the client.
I saw with my own eyes the number of Accountants swimming naked when Super17 was the advice need. And, you know, those clients not advised “because they didn’t want to pay for it”, can’t have a 2nd bite of the cherry if the Accountant has not done this correctly.
Accountants spend too much time in the past, which is necessary for compliance but, advice should be pro-active and forward thinking.,
I wonder how many SMSFs are going well under the guidance of an accountant compared the SMSFs run by full time Financial Planners????
According to the Government’s Cooper Review of Superannuation, the SMSF sector is “well run”. That inquiry considered the opinion of ASIC & the ATO in arriving at that finding. So in answer to your question, I would say all SMSFs are going well under the guidance of the accounting profession.
Agreed. One of the worst decisions of all time. Bring back the accountants exemption and the ability for accountants to provide strategic advice including tax, accounting, capital gains and providing advice with SMSFs without having to discuss with a financial planner. A recent situation was where a financial planner sold a property for a person and did not talk to the accountant. Needless to say the accountant now has to explain the situation to the client.
I disagree with these statements. Accountants have been pushing clients into SMSFs for decades and for many of those clients it has not been in the client’s best interest. The Accountants have seized on the SMSF industry as a way to charge client’s more in fees. A recent report showed that many SMSF were either non-compliant or not-appropriate for the trustees. Who do you think set up most of those SMSF in the first place? Yes, the accountants. Removing the exemption does not help the trustee…if the accountants were really concerned about their SMSF clients and their ability to get sound advice, they could simply refer their clients to a financial planner or hire a financial planner in-house. I can tell you now that a financial planner working alongside the accountant would result in a better outcome for the client. Let’s not go backwards here and bring back a system that did not work in the first place. Let’s keep moving forward.
There is an enormous amount of service and support that an accountant CAN give to an SMSF without needing an AFSL. However there is that tiny slice of what they do which constitutes personal financial product advice – even if they try to disclaim that there isn’t and if they don’t specifically make investment recommendations.
The SMSF itself is a financial product and every transaction in or out is a financial product transaction.
The inferred endorsement the client gets from their accountant when an SMSF is used to implement things is what requires an AFSL. The scope of the personal financial product advice needed is basically to answer the question “Do you endorse my use of an SMSF for my super/this transaction?”
If you don’t endorse what the client was doing – then most clients would rightly expect you to tell them !! But that’s illegal without an AFSL. And is excluded from PI policies.
It doesn’t make sense for smaller firms to run a whole AFS license for that small scope delivered only a couple of times per month. But it also doesn’t make sense for ASIC to exempt it either. So the industry has a big problem.
The only solution is for licensed advisers to offer a streamlined referral service – based on a very tight scope of advice – in an efficient way and at low cost. Just like audit or actuarial certificates.
Luckily that exists already.
How do I sign up?