FASEA ‘another nail in the coffin’ for limited licensing
The types of services that can be offered under limited licensing are unlikely to justify the cost and time involved in completing the new FASEA standards, which could mean the end of the limited licence, says a business consultant.
Speaking to SMSF Adviser, Mayflower Consulting managing director Sarah Penn said that, in many ways, the new professional standards for financial advisers “will end up being another nail in the coffin for the limited licence”.
“There is no carveout under FASEA for those on a limited licence, so anyone under a limited licence has to make sure that they’re degree-qualified,” Ms Penn said.
“If you’re already an accountant, there are not a huge number of extra units that you have to do, but there are certainly some, not zero.”
Accountants, she said, will still need to do a few units in most cases and some will consider whether it’s better to become qualified as a full financial adviser so that they can provide a much broader range of services to their offering.
“If you have to go and do four units just so you can help your SMSF clients set up their pension, then that’s not a good return on investment,” she said.
“I haven’t heard many accountants say that they will do the extra modules, but I think for the new people coming through the system, if you’re already doing a business degree and an accounting degree, I think adding on the additional units to end up with a financial planning degree will be worth it.”
Ms Penn said that she expects joint accounting and financial advice degrees will become increasingly common, particularly for those entering the accounting or financial advice industries.
“There is a lot of crossover between accounting and financial advice. They’re not the same by any stretch, very different people tend to gravitate towards one or the other, but I think over time the two will merge, and financial planning might even just become more of an extension of accounting, rather than a completely different thing.”
Ms Penn previously predicted that limited licensing would eventually be scrapped by ASIC given the scarce take-up and the issues with its implementation.
As with other types of new legislation, she said that there have been many “teething issues” with the limited licensing regime.
“This would be fine if it was an industry-wide thing and everyone had this new licence, [because] ASIC and industry would then have to figure out how to make it work, but there’s only a few hundred licences out there,” Ms Penn said.
“I don’t think anyone at a policy level has the interest or the time to try and figure out all these teething issues, and really, there’s not very much advantage of a limited licence over a full licence.”