Mayflower Consulting director Sarah Penn says, in the long-term, the larger dealer groups will attempt to move accountants under limited licences on to full licences “or out the door”.
“This is an issue for the wider planning community as well. Most of the big dealer groups are really starting to cut down on the number of people that they licence,” Ms Penn told SMSF Adviser.
“[Therefore, you need to be] in it boots and all and really want to give lots of financial advice to lots of customers in a big organised and compliant way. But if you just want to dabble in it, it’s just way too much risk for whoever actually holds the licence, and the chance that you will inadvertently, even with the best intentions, mess up is pretty high.”
Ms Penn said this is partly due to concerns that Australian banks will follow the same path as the UK.
“In the UK, the banks have all gotten rid of their financial planning arms completely,” she said.
“In Australia, there is an expectation that that is what’s going to happen over time because you just have to have that separation of church and state, and the actual dealer group entities don’t make any money.”
While this doesn’t particularly matter if banks are able to push many products through these dealer groups, it’s no use if they’re not.
“At the same time, there’s a whole lot of risk for whoever owns the [licence]. In the big end of dealer group town, the banks are looking at what they’re going to do in the future, and there’s a lot of expectation and quiet talk on the side that dealer groups will all be sold off,” Ms Penn said.
“If you’re preparing an asset for sale, you want a nice clean asset, and if you’ve got a couple of accountants over in the corner that are being licensed through something that doesn’t really work very well as a legislative instrument, you’re just going to have to get rid of it or get them to get a licence through someone else.”
This news comes as CPA Australia Advice, the licensing arm of accounting body CPA Australia, continues to struggle to secure authorised representatives. At last count, in early June, the subsidiary had issued 25 licenses.
It also faces a rocky road ahead, as the Professional Standards Council has not been able to approve a new scheme, which limits the liability of practising CPA members, due to the conflicts that have arisen from the establishment of CPA Australia Advice.