‘Very big problem’ on horizon for accountants
Fresh concerns are mounting that accountants who plan to take advantage of the transitional licensing arrangements and exemptions granted by ASIC will lose their privileges, given the inadequacies of applications and increasing rejection rate.
Accountants are able to take advantage of the transitional arrangements for the responsible manager requirements if they lodge their application for a limited licence by 30 June, and that application is subsequently approved.
However, if that application gets rejected, and the accountant is required to re-lodge the application after 1 July, they will lose their transitional exemptions, according to solicitor at The Fold Legal, Jaime Lumsden Kelly.
"I feel like that is going to be a very big problem. So if I was an accountant who was thinking about lodging late, I’d want to make sure my application was in top-notch shape. The stakes are quite high at that point," she told SMSF Adviser.
ASIC experienced a spike in licensing applications submitted around March, in line with the soft deadline it set in 2015.
Another spike in applications is anticipated closer to the June deadline. This is consistent with past experience, such as with when the Australian Credit Licence was introduced.
Overall the process has been "slow going", according to Ms Lumsden Kelly, in part due to a lack of resources with the regulator. However, Ms Lumsden Kelly understands more resources have now been put in place to deal with the new regime.
Hold-ups can also be attributed to inadequacies in licensing applications, and accountants' attitudes to and understanding of the licensing application process, said Ms Lumsden Kelly.
While ASIC's guidance in some cases "is not as clear as it could be", specifically, accountants have not been providing adequate documentation, and are not completely across the regulatory guidelines and checklists, said Ms Lumsden Kelly.
"Generally the experience for accountants has been quite difficult. In our experience it's been a bit more challenging for them than it has been for previous ways of licensing. Credit licensing was quite streamlined, but the accountants licensing has not been.
"For accountants who are attempting to go through it on their own and unsupported, I know that the quality of the applications has been quite poor. They seem to be treating the ASIC licensing process more like a registration process, where they send their information and that’s the end of it.
"ASIC regards the licensing function as a gatekeeper, so they're putting more scrutiny on people to make sure that they’re giving licences with people that they can expect to comply with the law. There's a bit of a mismatch between how ASIC regards licensing and how accountants regard licensing, and I think that's a lot of the cause of deficiencies," she said.