Last week, the ATO released an update on robo-advice for SMSF professionals and trustees which stated that while unlicensed accountants can provide basic information such as robo-adviser contact details “they can’t guide [trustees] through the process or endorse any advice provided by the robo-adviser”.
Speaking to SMSF Adviser, ASAP Advice founder Jim Hennington said the update confuses the ‘mere referral’ exemption under regulation 7.6.01(1) of the Corporations Regulations 2001 which applies to arranging for a ‘particular financial service’ and restricts the referrer to only providing contact details of that AFSL holder.
“Last week’s ATO update has incorrectly assumed that because this exemption exists, accountants must rely on it when referring to a financial adviser or digital adviser — but this is a logic error. There is no financial service [with] arranging for licensed product advice to be provided, and so nothing to be exempted from,” said Mr Hennington.
“Accountants can assist their clients with the referral process and in using online advice scoping tools, providing they have careful policies in place to ensure their client understands the advice is delivered by a different AFSL holder and not themselves.”
Mr Hennington said there also seems to be confusion around what constitutes a recommendation to use a product where an accountant makes a referral to an adviser who only recommends a narrow range of products.
“We have sought senior legal advice on this key issue. Provided that the intent of the referral is to ensure the client gets advice before making a decision then the referral itself is not financial product advice,” he said.
“It is the adviser, not the accountant, who is responsible for ensuring the scope of their service meets the personal needs of the client. Licensed advisers and digital advisers must decline to provide advice if the advice can’t be scoped in the best interests of the client.”
The focus of accountants instead, he said, should be on ensuring that clients understand there is a “clear divide between the accounting services and the advice services provided by any adviser”.
“It’s compulsory for certain transactions to have a statement of advice (SOA) from a licensed adviser because of the arranging laws. Establishing an SMSF as a replacement product for a rollover out of an existing superannuation fund is the obvious example,” he said.
“Whilst ASIC have not publicly held anyone to account so far, the other huge risk is that your PI and Professional Liability Scheme won’t cover you if you break the rules and make a mistake or have a disgruntled client.”