Speaking to SMSF Adviser, Merit Wealth accountants services director David Moss said ASIC hasn’t announced any prosecutions for accountants providing unlicensed advice on contributions, pensions or SMSF setups, which has created a bit of complacency among some SMSF accountants.
“No one has been knocked on the head for doing the wrong thing. So there’s a big part of the population saying ‘we’re hearing all of these scary stories about not being about to give advice unless you’re licensed, and that I should get a licence, and the sky is falling and all these things could happen, but in reality, we’re not seeing anything happen so why should I’?” said Mr Moss.
Mr Moss said accountants have been told that they should be fearful about failing to comply with the new licensing regime but don’t want to act until they actually see some enforcement action.
“Accountants out there, are saying, ‘why should I do anything? It’s all a big scare, I’ll do something once I see a problem’,” he said.
“In the background, we know that ASIC and the ATO are talking, we know they’re doing a whole lot of information gathering and with all the superannuation changes their ability to know who’s giving which advice illegally is ramped up,” he warned.
“ASIC has a plan, they’re getting organised and at some point they’re going to come out and hit a bunch of people. It would be silly to think that’s not going to occur.”
Paradigm Group managing director and client adviser Patrick Nalty likewise agrees that both the ATO and ASIC are still in the surveillance stages of investigating breaches.
“There’s a little surveillance operation going on at the moment to see how far reaching the breaches are. When someone sets up an SMSF, the ATO has been contacting the trustees to find out who set up the SMSF, were they licensed, if they received an SOA,” said Mr Nalty.
If some of the requirements such as the SOA have not been met, or the advice was provided by an accountant who is not appropriately licensed, this will then be passed on to ASIC.
“They’re trying to gather a whole raft of data at the moment, but my view is that I think they’re going to say, well let’s give them 12 months to get them used to the new regime and then I can see some big enforcement issues coming into play. So, I think they’ve got to work out the size of the problem,” he said.
The legislation is all grey, making licensing a joke as it stands.
The accounting bodies and ASIC are unable to distil the legislation into clear rules to enforce.
Some accountants are being cautious, others aren’t. Nobody actually knows if an SOA is required if the client doesn’t want to pay for one.
The best ASIC can say is it’s “likely” that you’re breaking the law.
So if your clients are happy, and they’re not doing anything stupid, and you use disclaimers then what’s the worst (likely) scenario?
ASIC: why should we pay lawyers to figure out your clumsy rules when you clearly don’t understand the accountant-client relationship ?
What is the accountant-client relationship? What is it about this relationship that sets you above the law?
Sorry Jimmy, but the accountant client-relationship is well within the law without a FP licence. Read ASIC’s INFO 2016 Guide which makes it clear that an accountant can deliver a host of traditional SMSF services, provided they only give factual advice and adequate disclaimers.
The fact we don’t make recommendations….!
George, factual advice sounds like advice to me. Maybe you mean factual information but as you’ve typed in ‘advice’ I’d be inclined to think that your Freudian slip shows what you think it is you’re giving and more importantly what you’re clients think it is they’re getting.
Bill, i’m sure you think that you don’t make recommendations. As i’ve said to Georgie, it doesnt matter what you think, it’s what you’re clients say when they make their complaint. They will say that Bill advertises as the “trusted adviser” and that’s what i think of him. I trust everything he says, so when i asked him about setting up an SMSF and I asked him about shares and I asked him about starting a pension, and i asked him about ….insert action here …..(you get the idea) i trusted he was acting in my best interest. Bill just had me sign all these papers, i wasnt sure what they were but i trusted Bill, he was my accountant…..I didnt realise that we’d lose all our insurance, Bill never mentioned that, now Mary is dead and i’ll have to sell the house….or how about “I didnt realise those Guevera shares that Bill said he had some access to was dodgy and that we’d lose a bucket load of money. He said he was investing in them as well, along with a bunch of other clients. I didnt realise Bill was getting so much commission from it”…. Bill, your Trusted Advisor….!
It’s the role of your professional body to interpret legislation, make judgement calls and create professional standards for members to adhere to (after working with the regulator to ensure the laws make sense).
Oh that’s right. The CPA is single mindedly pushing its own license, the IPA is taking backhanders from Shadforth referrals and the CAANZ has totally washed their hands of the issue.
Bad lack gus. Hopefully you’ll muddle through till share markets tank and your clients realise they can easily sue you after ‘execution only’ transactions, disclaimers or not.
One day Anom when a death benefit advice, a pension gone wrong, an excess contribution, etc happens and the clients rightly say that you advised them and you either don’t have an AFSL or do zero AFSL compliance then you won’t have any PI and clarity might actually hit you right where it hurts $$
Enjoy your blissful ignorance before 🙂
Of course an SOA is required even if the client doesn’t want to pay for one. It is required if you give advice. Its not that hard.