Predictions of a lack of interest among accountants in taking up a limited Australian financial services licence (AFSL) appear to have been on the money, with just 19 applications received from an industry of around 180,000 practitioners in the first three months since the initiative’s launch.
This is despite the industry having more than a year’s notice that the SMSF exemption would be phased out.
So far, of those 19 applications just two have been approved, Australian Securities and Investments Commission commissioner Greg Tanzer told the Institute of Chartered Accountants Australia (ICAA) SMSF conference in Melbourne earlier this week.
The initiative was proposed in June 2012, finalised in June this year and enacted from July 1 this year, giving accountants who wish to continue to advise on the set-up and closure of SMSFs a three-year window to qualify for a full or limited AFSL before the current accountants’ exemption is removed on 1 July 2016.
The limited licence is restricted to members of the joint accounting bodies but with the ICAA recording around 60,000 members as of June 2012, according to its financial report, CPA Australia boasting 144,000 members globally according to its website, and the Institute of Public Accountants claiming 24,000 members, the bulk of Australian practitioners qualify – though only a minority would perform enough SMSF work to consider a licence.
The licence is otherwise fairly restrictive, requiring most of the compliance legwork of a full AFSL (less the responsible manager requirement) but only allowing practitioners to give limited class of product advice and advice on the set-up and closure of SMSFs.
The shape of the legislation led the chief executive of accountancy-focused dealer group Count Financial, David Lane, to predict that most accountants looking to move into a licensed environment would prefer to get a full licence rather than “do 95 per cent of the training [to] give 10 per cent of the advice”.
“It really is a very limited licence,” Mr Lane told SMSF Adviser's sister publication InvestorDaily in June. “In reality, you’ll see very few accounting firms take this up.”
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