Potential implications for accountants, lawyers with QAR proposal

Mr Ashenden explained that under the current definition of personal advice, personal advice is typically where there is a recommendation or statement or opinion being provided to somebody where there was an intent to influence a decision about financial products.

Where it is personal advice, you have taken into account one or more of the individual’s circumstances, goals or objectives.

“Under the proposed definition, personal advice will still include making a recommendation or giving a statement of opinion designed to influence someone but its no longer a case of saying that you’ve taken their personal circumstances into account,” he explained at the SMSF Adviser Technical Strategy Day.

“What’s being proposed is that it will be considered personal advice if you actually hold information about the client. So if you hold that information, then it becomes personal advice presuming you’ve made that statement of opinion or recommendation.”

Mr Ashenden said that one of the big concerns with this proposal is that if a professional holds information about a client they will fall within the definition.

He noted that its not clear at this stage how much information about the client would be enough for the adviser or professional to be captured under the personal advice definition.

“Does the information actually have to relate to the comments that were given and if they’re unrelated then is that still captured as personal advice?” he questioned.

This proposal could mean that more people will be providing personal advice when it wasn’t intended.

“That’s the concern because if you’re doing the things that meet the definition of providing personal advice then you need to be licensed to do it,” he said.

“What does that mean for accountants and lawyers?”

Where professionals provide legal advice, tax advice or advice on structuring or something similar, there is a specific exemption that allows that under the current law, Mr Ashenden noted.

“What we don’t know yet is whether they are looking to remove that exemption, or will the exemption stay?” he said.

“If the exemption stays then you’ve got a question around how you separate the two things out — how to you identify when its actually financial product advice versus tax advice or legal advice.”

Mr Ashenden said these are still are number of questions to navigate with which may be dealt with as part of the final recommendations.

“There is the potential though that more of what you do could be categorised as personal advice. That could make things more difficult for those operating in a multidisciplinary practice where certain things will be financial advice and other things will be tax advice,” he said.

“If the lines start getting blurred, what does that mean for the financial planner?”