Risks flagged with new automated SMSF products
Unlicensed accountants planning to use automated advice systems and products to meet their clients’ advice needs could be setting themselves up for significant compliance risks and litigation, warns an industry consultant.
“There is nothing wrong with [automated] advice, I’m actually all for it but the accountant can’t pass off that advice as being their own. They need to be very clear that advice is being delivered by a different AFSL through a computer system,” Ms Penn said.
“They can’t be discussing what the computer says in terms of advice, they can’t be trying to pass it off as their own. It needs to be quite a distinct hand-off to the computer system to deliver the advice.”
If the accountant is seen to be giving the advice when they’re not, this could lead to legal issues.
“People always go to the person that’s told them the information. This is why financial advisers end up in trouble. Some of the time, it’s the advisers’ fault but some of the time it’s not, it’s the product providers fault,” Ms Penn said.
Clients who’ve experienced losses or other negative outcomes as a result of advice they’ve been given will always go to whoever their contact is, she stressed.
“So if people have gotten involved in dodgy investments, they’ll go to the adviser that told them about those dodgy investments. If people have been given dodgy advice from a robo-advice system, they’ll go to the accountant who sat with them while they entered all the information into the system,” Ms Penn said.
“At this point, it really doesn’t matter what the legal contract says in the background. They’re the person who’s going to get their name dragged through the mud from a reputation perspective. They’re also the person from whom the client is going to be looking for compensation.”
For accountants who are licensed, Ms Penn said it is vital they operate under the premise that evidence is everything for ASIC. She said unless accountants can substantiate that they have fact finds, statements of advice and compliance plans, “they will be in a great deal of trouble when ASIC comes knocking”.