Advice regulations plagued by structural issues, says SMSFA
While the SMSF Association doesn’t believe the accountants’ exemption should be brought back, the current regulations are forcing a “one-size-fits-all” approach onto consumers and making it harder for individuals to access advice.
Speaking at a roundtable event hosted by OpenInvest, SMSF Association chief executive John Maroney said that, while the SMSF Association doesn’t believe the accountants’ exemption is a good model to return to, there are some “real structural problems” with the provision of financial advice that need to be looked at by the government.
“In practice, the accountants’ exemption was probably abused more than it was used as designed. There were a lot of accountants giving advice thinking that the exemption applied to them and it didn’t, so we don’t think it’s a good model to be going back to,” Mr Maroney explained.
“At the same time, there are issues with the existing model of accountants not being able to give answers to fairly simple questions such as whether it’s worthwhile making a concessional contribution as part of a tax planning exercise.”
Mr Maroney said that there are a lot of strategic and other issues that would fit naturally into how accountants would deal with their business clients which should be okay practically, but a lot of them are fearful of doing so because they’re not sure whether it would fall into the definition of financial advice.
“The guidance from ASIC is fairly complex. I’ve read through it, and I must say that I wouldn’t want to have to go out as an accountant the next day and say I know exactly what that means in practice,” he said.
“I think it’s a subset of the broader issue that we are making it harder and harder for people to get advice and assistance that is fit for purpose and fits their circumstances and doesn’t end up costing them a large amount.”
The current regulations around financial advice, he said, assume that all consumers want full-blown financial planning to cover all of their needs and into the future.
“I think [there] is a real structural problem, and I would hope that’s an issue that does get looked at by governments in the future. We are effectively forcing a one-size-fits-all approach, which has been further exacerbated by some of the recent developments by FASEA which has completely ignored the existence of limited licensing under the law,” Mr Maroney said.
“That hasn’t been taken into account, so there are a number of problems with the way advice works in general and the way it works with limited licensing or those that used to operate under the exemption, but I don’t think the answer is going back to where we were before.”
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 also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.