Licensing for Accountants CEO Kath Bowler says while the practice of unlicensed accountants using licensed providers to issue SMSF advice is a “good option” for some accountants, there are risks involved in the practice.
Ms Bowler said she is “not convinced” that the documents created are compliant, and clients could be misled as to who is giving the SMSF advice. While an unlicensed accountant might distribute the SOA to the client, they are effectively not formulating the advice, she said.
“The risk is that the client perceives that the accountant is giving the advice, that’s a huge one, because if [the accountants are] the ones collecting the data and delivering the document back, even though their name isn’t on the document, the client will perceive the person who handed them the document and collected all the information is the one giving advice,” Ms Bowler said.
“I’ve had a look at a few [documents] and I’m not convinced that the documents that are being produced are compliant, so that could have an impact, because they’re not really doing a lot of checks and balances to give appropriate advice and the SOAs.”
Ms Bowler said the practice could hold potential benefits, but given the number of accountants who have not obtained their licence, further legal inquiries need to be made to ensure the documents produced are compliant.
“We think it has a lot of potential considering how many people chose not to get licensed but just want to get a bit more advice and comfort around how these models can work before we start … supporting them,” she said.
“We’re exploring [the issue] and getting some further legal advice on that. I can see it as a solution but I can see it’s potentially got a lot of risks if not done well.”
Ms Bowler added that both unlicensed and licensed accountants need to ensure they are operating within legislative rules, and applying the necessary checks and balances when going ahead with the practice.
“For the licensed provider, they need to ensure they can meet their licensing obligations including appropriate advice when in many instances, they won’t have met the client,” she said.
“For the unlicensed accountant, they need to ensure their clients are not perceiving that they are the provider of the advice. From a reputation point of view, they should also be concerned about the quality of the advice being provided by the licensed provider.”
As a Licensee Kath should be aware the above process, described as a “good option”, is in fact a breach of Best Interest Duty. The unlicensed Accountant cannot simply handover an SOA. In accordance with Best Interest Duty the SOA must be presented to the client and an understanding of advice documented in a File Note. Furthermore, how is implementation of the advice discussed and who provides ongoing advice to the client? This article highlights that Accountants are currently in breach of their license. Client Best Interest Duty also calls for the Accountant/Adviser to confirm that they are both suitably qualified and experienced to provide the advice. Accountants undertaking this process are clearly not and appear to be chasing fees.
Hi Stephanie, I agree, we have experienced a lot of grey areas over the past 12 months, ASIC, Accounting Bodies, Professional Associations and Advisers have focused on assisting Accountants to obtain their limited licence. A void exists in what you can and can not without a licence. ASIC has provided some clarity on this and has changed some Regulations to reduce the grey area. I call on the Accounting Associations, Professional Bodies and Adviser to provide clarity and reduce the grey area. Kath, I support you on getting legal advice to help reduce the grey. Here’s to some black and white guidelines that we can apply our professional Judgement to. Kind Regards to all.
How is it possible for this process to be legal if the accountant can’t provide any advice but does a fact find and the licensee does an SOA recommending an SMSF without ever speaking to the client. Essentially, no one provides any advice but they end up with an SMSF whether it is appropriate or not! If a client walks into an accounting practice and leaves with an SMSF the reasonable person will always take the view that the accountant has influenced their decision i.e. provided advice.
So Ms Bowler is actually saying that she is “not convinced” that some financial planners are issuing compliant SOA’s through their authorised agents. Perhaps she should report the “unconvincing” Financial Planners to ASIC