Accounting firms facing roadblocks with full AFSLs
A number of accounting firms are hitting obstacles when applying for AFS licences as they’re struggling to find a suitable responsible manager to put forward, according to one consulting firm.
The Fold Legal head of licensing Sónia Cruz said one of the key issues the firm is seeing around licensing in the SMSF space at the moment is accounting businesses wanting to apply for an AFS licence but not having anyone in the business that they can put forward as a responsible manager.
“ASIC will not accept an accountant’s past SMSF experience under the former accountant’s exemption or the tax exemption as relevant experience,” Ms Cruz explained.
“This leaves accounting practices with very limited options, because they either need to source an external responsible manager or become an authorised representative of a licensee for three years before they can apply for their own AFS licence.”
Existing licensees with only one responsible manager are having similar issues where that responsible manager wants to retire.
At the same time, Ms Cruz said there has been a surge in external responsible managers demanding a premium for their services.
“This can be quite costly for a small accounting practice that only needs to operate under an AFS licence for a very small part of their business,” she said.
Operating as an authorised representative of a licensee also has its problems, she said, because the licensee is likely to be a financial planning dealer group.
“This is because other accountants with a limited licence have a condition on their licence preventing them appointing more than five unrelated authorised representatives,” she explained.
“Many financial planning licensees will treat accountants the same way as financial planners. They have the same onerous compliance and disclosure documents which simply [do] not work for an accountant giving occasional SMSF advice to a client.”
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.