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.”
Its time to remove ASIC….inept, incompetent rabble and together with the ‘noses in the trough’ aka large corporates and banks have totally screwed the industry. And we still don’t know what’s in ASIC’s 2018 conflicts register. Not a peep from the finance minister.
So lets remove limited licensing and then what for the client? FPs don’t want to give a ‘mini’ SOA to recommend they start a pension and if they do then they will charge at least $1100. I’m an accountant (who did not abuse the accountants exemption!!) and am now an AR providing smsf advice only. Its not worth the AR fees to do this and I have approached FPs to ask if we can refer clients to them to set up pensions and discuss contributions. Looks like they don’t see this work as cost effective for them either. So how does this help the client? Is it now in their best interests to have such difficulty in obtaining basic information such as what are the disadvantages and advantages to starting a pension? I used to provide information. Here is what a pension does, here are the considerations. Pretty much explain what the ATO is saying to the client. The client was given the information and they made up their own mind. Now they can’t even get that as it may be ‘perceived’ to be advice. Instead they need an SOA to tell them what to do. An SOA that no one wants to pay for. This system doesn’t work. My clients have expressed that this is rubbish. They get frustrated when I say I’ll just send you this Fact Find to complete first. A fact find that has a lot of irrelevant information on it given they just want a few questions answered. They don’t want to be told a recommendation. They want information to make their own decision. If they don’t want an SOA done then they get directed to an ATO webpage to interpret themselves with no professional input so that we can slap a disclaimer on it saying its in no way advice, only factual information. Its all just about covering butts. None of this is in the best interests of the client.
It’s time to remove limited licensing. There will soon be a single (minimum) FASEA standard to become an adviser and there should be a single licensing standard (i.e. full licensing only).
It’s also time for the accountants to professionalise their industry. The minimum education pathway to become a registered tax agent under the TPB is a DIPLOMA. The minimum education pathway to become a qualified accountant under the Corporations Act is also a DIPLOMA. Accounting has the easiest education entry of all white collar jobs. It’s time to raise that bar.
Let me guess. Only SMSF Association accredited advisers should be able to give full financial advice……
[b]WOW – someone who represents a bucket load of Accountants has finally admitted how massively Abused the old Accountants Exemption was. [/b]
Yet ASIC never ever busted 1 single Accountant for the massive amounts of illegal AFSL advice provided.
And ASIC has still never busted 1 single Accountant for the massive amounts of illegal AFSL advice provided.
“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.
Heads up John, there are still a lot of Accountants giving Illegal AFSL advice with zero AFSL compliance.
I hold a limited AR. My client needed more. They tried to find a planner who would just do an SOA. Unless products are involved NOBODY does an SOA to help clients plan for their financial future – the excuses: they would have to charge an hourly rate (and they don’t do it anyway), it was too risky, doesn’t fit with the FP business model. If not your accountant or FP, who?