Compliance risks flagged with LRBA bank documents
SMSF professionals need to carefully review bank documents for borrowing arrangements before signing them as they could be breaking the law, warns a boutique financial services company.
Merit Wealth accountants services director David Moss says when clients are in the process of entering limited recourse borrowing arrangements, the bank will usually ask the accountant or adviser to sign a certificate which states they have given the client financial advice.
While unlicensed accountants may be able to sign off on certain certificates because of the way the certificate has been worded, there are plenty that could place unlicensed accountants at risk of providing unlicensed advice.
“Some of these certificates say, ‘I have given you financial advice’ and you’d be breaking the law by signing that document if you weren’t licensed,” Mr Moss said.
He warned that even licensed accountants need to be checking for any “tricks and problems” associated with the wording of these documents.
“With some of these certificates, you’ll need to do a statement of advice for the loan simply because in the wording of the document it says ‘I have given you advice and provided you with a statement of advice’”.
“So if you’re signing documents saying that you have provided a statement of advice, then you better give a statement of advice.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.