Mr Smith told SMSF Adviser that while accountants may already be providing the type of advice they intend to provide under the limited licence next year, the licence will require additional processes to be incorporated into the advice they currently provide, something which many accountants are not prepared for.
“There’s a lot of activity around licensing at the moment but what a lot of accountants are not thinking through is what they actually have to do from a process perspective come 1 July,” said Mr Smith.
“All of a sudden they’ll need to have different processes because they’re actually going to need to generate statements of advice and engage with a client to ensure they’re gathering all the information they need to provide the advice.”
Mr Smith said he is concerned that few accountants have actually thought through these processes and so will not have enough time to introduce them before the accountant’s exemption ends mid-next year.
“Anyone who isn’t currently licensed won’t be following the processes they need to follow come 1 July,” he warned.
“A lot of firms will get the licensing piece right because that’s what people have been telling them to do, to go out and get the training and the right licence, but I think many of them haven’t thought about this processes piece.”
Mr Smith said the cost of certain processes is one of his major concerns.
“Many of the licensees are requiring fairly lengthy statements of advice, which could add significantly to cost and make it difficult for accountants to be able to charge their clients and recover those costs from their clients,” he said.
Mr Smith added that those who are not planning to become licensed at all may also find it difficult to provide advice that is in their client’s best interest.
“Come 1 July next year, a good accountant will be able to have a broad-based discussion with their client about everything to do with their business and financial affairs, and it will be very hard for an accountant without a licence to have that discussion without discussing things like superannuation, which is getting into the realm of needing a licence,” he said.
He concluded, however, that the licensing regime will allow more proactive accounting firms to branch out into financial planning.
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So Jimmy Neutron, you claim that accountants have been providing unlicensed advice for “all those years”. This is incorrect as the requirement for licensed advice has only come about as a result of the classification of a SMSF as a “financial Product” This classification only occurred as a result of the FOFA changes – and accountants were covered by the exemption.
In reality the creation of SMSF is just another structure on the same level as a company, or trust or partnership etc. A SMSF should not be classified as a financial product as it clearly is not. The investments or insurance maintained in a SMSF are financial products, but very very few accountants would have ever advised on those unless they were licensed. Those very very few that have advised on investments without being licensed will be dealt with by the ASIC. That is not the vast majority of accounts. – and its not for all those years….
So concerned accountant, you and all your accounting mates have been providing unlicensed advice for all those years. ASIC has just turned a blind eye to all this over the years, hopefully this will now change.
This is so true David. I am also concerned that accountants don’t realise they have to change their processes to make this work. However, having now worked with a number of accountants on this very issue, it doesn’t have to be a daunting task. With the right support and tools, sometimes it’s just some minor tweaking to the process that’s needed.
Agree fully with the author.
But then after all, this is what the banks and others who pushed the end of the exemption were aiming for – An increase in costs and red tape for accountants to allow them to do what they were already doing for years.
I cannot believe that our accounting bodies (representatives) did not fight this tooth and nail.
Had concerted opposition been mounted from the accounting bodies, this legislation would not have happened.
Makes you wonder how many of “our” representatives already held Financial Planning licences and therefore didnt really care about defending the rest of us. They should be kicked out of the accounting bodies for conflict of interest.