‘Concerning’ activity surfacing with accountants’ certificates

“We’ve seen some interesting activity that’s been reported to us by members where they’ve been approached by people who are not clients or dealt with before seeking to have certificates signed off,” said Ms Scotchbrook.

“This is a concern given the nature of what’s being attested to and the importance of it.”

Whilst the accountant is providing a statement of fact around someone meeting a test, Ms Scotchbrook stressed that accountants still have a professional ethical obligation to make sure that the certificate is correct and appropriate for client circumstances.

“[My] recommendation would be that unless you know the client, then perhaps decline the engagement,” she advised.

She also highlighted the importance of keeping good records so that practitioners can show how the client has met the test where they do agree to sign off on a certificate.

“It’s important that the client understands why they’ve been moved into that sophisticated or wholesale environment. So whether they’re an SMSF client or an individual client, the same process should be applied,” she stated.

“You do have an ethical obligation under APES 110 to ensure that you’re providing a statement that’s true and correct and not false. You also have duties to make sure that what you’re signing or the service that you’re providing is in the best interests of the client.”

Ms Scotchbrook said it’s also important that accountants are across what their professional bodies specifically require or their recommendations regarding accountants’ certificates.

In terms of a financial advice perspective, advisers, she said, need to consider the code of ethics.

“You need to consider whether or not that’s appropriate for that [client’s] circumstances because any time you’re moving a client out of a retail client environment they’re losing their consumer protections,” she said.

“So be really careful to make sure that it is appropriate in the client circumstances that they do understand why.”

Systems and processes, she said, are also really important.

“You need to make sure that if you’re advising both sophisticated and retail clients within your client base, that they’re clearly identified and the way that you engage with those clients is appropriate,” she said.

“Once someone is a retail client, and once a product has been placed as a retail investment then it will forever be in that retail environment. So it does require some careful planning processes [and] procedures to make sure that you’re engaging their clients in the right way.”

In an earlier submission to the Quality of Advice Review, the SMSF Association noted there had been an increase in the use of the wholesale investor regime recently, likely driven by the increasing cost and complexity of providing advice.

“This is of deep concern and should be viewed as a significant red flag. It is a ‘canary in the coal mine’ moment for the advice sector,” the submission warned.

“Advisers should not be incentivised to shift clients away from a regime which contains vital consumer protections.”