AIST was responding to questions on notice that were posed following a recent hearing before the Parliamentary Joint Committee (PJC) on Corporations and Financial Services regarding gatekeepers in the industry.
van Eyk chief executive Mark Thomas had suggested in the hearing that the largest expectation gap within the industry was around the regulation of SMSFs and how people are being licensed to establish them. AIST was asked to comment on this and whether the area needed reform.
AIST said expectations of and behaviour within SMSFs should, as far as possible, be placed on a level playing field with the “rigorously governed” Australian Prudential Regulation Authority (APRA)-regulated funds.
It recommended the removal of the current accountants’ licensing exemption allowing accountants to advise on the set-up and closure of SMSFs without an Australian Financial Services licence, or at a minimum that the exemption phase-out should be cut back from three years to six months.
This recommendation was strongly opposed by the IPA, with chief executive office Andrew Conway calling it “nonsensical and devoid of reality”.
“If you were to remove the transitional provisions, what you’re basically saying is you want to shut the door on potentially thousands of qualified practitioners providing advice to clients,” Mr Conway said.
“It strikes at the heart of the government policy intention of maintaining access to affordable financial advice.”
Mr Conway also said cutting the transition period to six months would still be problematic for practitioners needing to make changes to their businesses. The three-year timeframe is practical and “more than reasonable”, he added.
“We’ve had three years of extensive consultation on the accountants’ exemption, and also working with the government to encourage accountants into the licensing regime,” Mr Conway said.
“By way of practical implication, it must have a form of transition to ensure people move into the new system, and that’s what we’ve achieved.”
Yes we should all work together and I do as I have 2 great planning firms I use depending on the needs of the client. I wouldn’t ever direct investments myself. As for spelling, it is generational I admit and I guess many people don’t know what is wrong anymore. Or so my kids tell me when I tell them off.
Agree Barbie, the planning industry is only in it’s infancy and an “industry”. The CFP mark has only just required a degree plus undergraduate and or & graduate status plus experience. There has certainly been cowboys and yet some excellent professional members. In the same way cowboys in the planning industry have caused over regulation and lack of consumer confidence to planners such as myself,Changing times, new uses of SMSF, “some” cowboys amongst accountants, the right political party in power(Labor),is bringing over regulation onto accountants. So to blatantly blame planners for this legislation & throw in some insults is just crazy. As an association I would be looking inwardly saying how do we ensure our members are exceeding government minimums as opposed to looking at scapegoats. It’s nice to read something from yourself without slagging off financial planners or someone’s spelling. Why can’t planners and accountants work together to weed out the cowboys altogether?
Some very sane comments on here at last. I do agree that ICAA stepped into the financial planning field too strongly. But their aim was to ensure professionalism as so many financial planes BACK THEN were ex insurance salesmen with little education. (OK Jason hit me with the next rant). Overall I couldn’t care less what ends up happening as I specialise in tax. But has been interesting to read the arguments on both sides.
Chris, seems like your “industry association” has done such as great job of regulation that the Government is now also stepping in. Also it appears also to be stepping in for the public interest. Times have changed. Accountants have no one else to blame but themselves (& Bill Shorten) for this over regulation, don’t blame planners,and slagging off planners won’t help.
All of the known “professions” like lawyers and accountants self regulate.
Financial advisers were so unruly that Government needed to step in and regulate them to protect the public interest. That is why other professionals resent being told by financial advisers what they should or shouldnt do, because they hold a “licence” to do it. Thats also why accountants are so resentful of being dragged into your over-bearing ASIC licensing regime. We just didnt earn your punishment so why should we be tarred with the same brush. An FP is only as good as their education and experience, like the rest of us.
Ask an accountant or a lawyer what job they did before their profession. Usually, they were at school then Uni. Ask a financial planner and they always have a story about a previous occupation which all too often has nothing to do with investments or taxation e.g car salesman, bra salesman, farmer, are a few that I have heard.
Gerard the voice of reason. Everyone’s got a horror story about an accountant or financial planner. I think the professional bodies are responsible for not regulationg the industry as strictly as they should, allowing the standard of practitioners overall to suffer.
There have been some gross exaggerations here about all accountants doing this and all financial planners doing that. How about some clear thinking: some accountants do the wrong thing, and so do some financial planners. These groups are the ones that need more education or in some cases reprimanding.
I am both a chartered accountant and financial planner (CFP) and see both sides of the problem.
CAs must do 120 hours of CPD over a 3 year period and CFPs about the same.
Whatever the outcome some planners will fall into a big trap if they start advising on tax and some accountants will mess up when it comes to planning.
All the unjustified criticism here (and it’s not all unjustified) is making it more difficult for accountants and planners to work together and respect each other.
In my experience it is very common, far too common, for unlicensed accountants to stray well outside the provisions of the SMSF exemption. The cause what accountants perceived to be the extent of the exemption. Three year transition is far too long & 12 months would be adequate. As for AISTs other idea ie to require full APRA prudential requirements for smsf’s , it could be seen as self serving & such an approach would be unnecessary overkill .
Barbie Chiro. It would be great if there was more accountants like yourself who stuck to what they are best at, that being the providing of tax advice. However times have moved on and most accountants are now “selling” SMSF and no longer just giving tax advice or just setting up a SMSF, but actively involved in recommending investments, types of asset classes and rollover of other super funds. Yes, you believe in your neck of the woods it is the opposite but my experience is vastly different to yours. Given the other comments here a lot of others also feel tax advice is not the only thing being offered in the SMSF sphere and hence why greater consumer protection is warranted. On another note; you dug a pretty big gutter and then got down into the dirt and started throwing mud so don’t complain about getting dirty. Is it true that you only require 10 hours of CPD training a year to be a Reg Tax agent?
Goodness me this site has been a revelation to me. I am a well recognised tax consultant mate not a number cruncher. The misogyny on here is amazing. I stand by my point that banks and planners TRY to put my clients into SMSFs without valid reasons. My comments have become harsher as more planners make outrageous statements. I feel very sorry for you all if you are all so bitter.
To Barbie Chiro.
I read your comments and they are very negative towards financial planners as an industry. I as a planner have seen many clients inappropriately placed in SMSF’s by their accounatnts. Sure the setup was done correctly, but no thought given to actually advising the client whats actually best for them. Lets be frank and say SMSF is a cash cow for accountants and if they loose that privelage well it will be very hard on some. But lets not paint a whole industry with one paintbrush. I have met many “dodgy” accountants in my time, yet I don’t feel that accountants as a whole are bad. Please keep an open mind. I know its hard when your a number cruncher.
Actually I got OUT as you term it Jason because I knew my expertise was tax and business building. I knew pretty quickly that I did NOT want to be a financial planner. As for your foolish gibe about my name I am quite prominent on search engines anyway and proud of it. I was definitely NOT a managed fund person. And Barbie doll? Mm a man in a blue tie methinks! This is mean to be about advising not personal hate mail.
Barbie Doll, did i touch a sore point? take a breath. Yes you said “Bill Shorten was a big help with superannuation”. I disagreed and said Bill Shorten is responsible for SMSF licensing proposal. READ IT YOURSELF. Take a breath Barbie,to repeat my point “He’s certainly helping you now isn’t he”. Nice comment. “Boring with people who know little else than managed funds”. Every comment you’ve said is very vexatious, I’d hate to be one of your clients seeing this. I’m sure your name Barbie Chiro is showing up on search engines as we speak and you’re clients are realising it’s better to work with professionals who work in their best interests and know when to refer to other experts as opposed to your short sighted approach of “knowing it all” and trying to be an expert in all matters and a master of nothing. Your very rude comments reflects on you personally. It’s lucky for us you got out as it sounds like you were just a managed fund salesnut by your own comment. watch your own spelling.
Jason can you READ? I said Bill helped us re SMSFs and listened to all we brought up. Goodness me how can you people be advisers if you cannot even spell or read? I have no intention of getting into the industry. Been there done that. Boring with people who know managed funds and little else
Barbie, Well you can thank Bill Shorten for your licensing requirements, no-one else, not planners. Given the comments here, your anger and vexatious comments should be directed at him and not financial planners. Less SMSF means more funds in industry funds means more political donations. It’s common knowledge Labor receives significant donations from Industry super funds. His future of financial advice reforms are an absolute failure and I would encourage you to read the Coalitions dissenting report on FoFa (Yes biased of course) but it highlights how corrupt Bill Shorten in ignoring all other opinions other than industry funds. Yes licenses are expensive and if you are thinking of getting into the advice industry it will be cheaper to buy CBA shares.
Patrick, do you know what an AFSL licence costs? I went to a CPA info night a couple of months ago and they were talking about over two thousand for an application and over three thousand in education costs, add the time it takes and that is a lot of money to say you know what there are tax advantages of putting money into super. I’ve also had a couple of spruikers quoting 5-7 thousand to apply for me so at somewhere around 10k I’m not surprised there have only been two licences granted thus far. I’m looking at being an authorised rep, could it cost much more? There seem to be more benefits of doing so.
Barbie, for “appropriately qualified practitioners” who do not want to be an Authorised Rep, getting their own AFSL should not be difficult. I have a client who was 62 before his accountant “fixed” his SMSF (set up by the accountant in the first place) by moving to pension phase at my suggestion. There are lawyers, accountants, doctors, dentists and all other types of professionals who are excellent and some who are not so good. There is simply no good reson to exclude any practitioner from appropriate education and compliance for any professional area.
Patrick you miss the point. We accountants in the main have no interest in a licence nor in giving financial advice. BUT we do believe we have a right to advise a client whether or not a SMSF structure could be a help. Never should we advise on WHAT investments would go into that structure. Who on earth wants to be an AR (I used to be)?
Andrew Conway claims that we should not shut the door to thousands of qualified practitioners. Errr, how do we know they are appropriately qualified just because they are accountants? If they are, they will have no difficulty gaining appointment as Authorised Representatives under an AFS licensee. The call to remove the exemption or at least cut back the phase out to 6 months is appropriate. Six months is more than enough time for “appropriately qualified practitioners” to get Ar status with a licensee.
Jason Shorten was a big help with superannuation. As a tax consultant who forms part of a specialist SMSF technical committee I can assure you he tried and listened at least. It appears from this site that it is an argument that will never be decided. Like the middle east accountants and planners will continue to blame each other for poor performance
Lady I was not intending to be personal. If it is about your spelling then that is a generational thing so if offensive I apologise. But you are the one who raves about what accountants do and I personally believe you to be wrong. As I have said repeatedly in my experience it is planners and banks wrongly spruiking SMSFs.
Craig hang on. Re read the original posts saying how shonky planners are. Under the original FSR Act of 2001 SMSF advice was falling under the same definition as a financial product, this being to establish a SMSF you needed to comply with Section 945A of the corps act,being the advice had to be suitable, reasonable and you’d have to provide written documentation and evidence to back this up. Your noble accounting profession whinged so much, that a special exemption of the legislation was made just for Accountants under the “it’s just another tax structure” argument. This special carve out is ending as result of Bill Shortens work, head of the industry super fund movement where all SMSF are coming from, being told to stop the leaks..not planners. TASA was then born from accountants saying if we have to do this then planners need to be tax agents. Thanks. I love accountants, blame Bill Shorten. I’ve provided plenty of good reasons as to why TASA does not make sense.
Lady your point is exactly what I and others were trying to make yesterday. If the accounants exemption is removed then similarly the financial planners exemption for tax advice should be removed also. The only reason any financial advisor has come up with so far to keep their exemption is that they are better than accountants. That’s where we start to take offence.
Barbie I applaud your passion for your industry and respect that youre coming from your experience as I am coming from mine. I think the emotion of this topic is blinding. There are really good people on both sides wanting to do the right thing for their clients. Unfortunately I just dont see how the industry can move forward where one industry can give advice one way and another in a different way. Interestingly all comments are expressing their desire for quality advice on both sides however everyone is getting personal. Barbie I am entitled to my opinion just like you without it needing it to get personal. I have respected yours.
I do not think I would dare say that ALL accountants are doing the right thing. What I say and can back up with evidence is that in SA at least it is banks and planners who set people up with SMSFs when they simply don’t have enough money in super. I am sick and tired of hearing that accountants ”blindly” do things when I see the EXACT opposite. And er…spelling!
You have your head in the sand if you think accountants are not giving financial advice and in some instances giving poor advice. How many accountants do you think have set up a SMSF for clients letting their insurances be cancelled or set one up and give guidance on what to do next. Your right clients do trust their accountants more so they will blindly do these things without knowing they should have a full analysis of their situation done. When I mean by tax advice for planners is, I would expect that they should have a competency level to broadly tell me if the investment strategy I am being recommended would have tax consequences however I would expect them to refer me to an accountant for full details. It wouldnt be an issue if you all played nicely and saw how both your industries could be a stronger profession by giving quality advice and know when to refer to one another or how to work with one another.
Barbie, entry requirements into accountancy are incredibly high. The ongoing regulation is the opposite. The last time the institute stepped into our accountancy firm was over 6 years ago. Ongoing training is a once a year NTAA 1 day course. The only regulation of accountants is benchmarking that the ATO runs. So long as your client pays the average rate of tax associated with the relevant industry no one will ever regulate what your actually saying or doing. If you think ensuring your client pays the correct rate of tax is regulation than you need to have your head read. People don’t lodge complaints for getting poor strategic advice, or paying “too much tax” (so will you ever be regulated, unlikely)but it’s human nature to blame others for “product” fails. Yes there is too many fraudsters, because anyone can call themselves an “adviser” but I can also argue there’s a lot of people who have failed financially & on age pensions from a lifetime of lazy advice from the accountant.
I find it interesting that Jason wrote we accountants are an ‘unregulated bunch’. Funny that. We would be one of the most guided and restricted professions in in the country and govts of all persuasions have deemed it unnecessary to make a law to control us because of this tight rein on us. Instead financial planners have openly and blatantly lost people their retirement savings. We continue to read of rip off merchants spruiking products to unwary SMSF trustees and thank goodness their accountants are in the main able to steer them away from these fraudsters. I think that using the term Tax Agent is fraught with danger. We certainly have a tax agent licence but as accountants are more educated, have much tougher CPE requirements and a stronger watch on us than your industry
I find it interesting that financial planners accuse accountants of setting up SMSFs too easily. In SA it is the major banks advising my clients particularly young high SGC earners to set up SMSF even if they only have less than $100k in their industry funds. It is madness and I stand by my comments that in my area ie Adelaide and surrounds it is the financial planners and banks who are openly pushing people into SMSFs not we accountants. But to those who say SMSFs are no longer required my goodness me READ and see the much better performance by SMSFs over the past decade
I shouldn’t be required to pay out thousands on a licence just to advise on a tax structure. (I disagree that accountants have somehow changed this fact) You see we both have the same complaint, just form the opposite sides of the fence. Also we both see poor practitioners but do you know anyone who has been sanctioned? Better self regulation by the various bodies may have reduced the need for the regulations we have.
Craig, Accountants are behind the times. We have the consumer credit code, we now have the need for a Credit License, we have an AFSL license. Why is it an offence under the credit act to recommend someone payoff their ANZ home loan but provided you’re a tax agent it’s ok? A SMSF was once a trust structure, accountants themselves have turned it into a “financial product” and hence why we need greater regulation.
Craig, my experience is different. I work in an accounting firm and they provide financial advice unlicensed. The majority don’t know the difference between financial product advice and tax advice. Just this morning a client told me the accountant fills out the switching form. Accountants may not physically put clients into investments but looove chatting about sharemarkets, term deposit and interest rates and for SMSF opening up brokergage accounts which are financial products.I agree only tax agents should provide tax advice, accountants are the tax experts planners are not. However there should be room for “qualified” advisers to provide advice around super. I shouldn’t be required to payout thousands for further education after having graduate and undergrad quals in accountancy myself and 20 years in the industry, just so i can tell a client to salary sacrifice $1 into super. Don’t agree with the lack of licensing.
Very true Lady. I wrote something similar on another article a few weeks back and was called naive so don’t hold your breath. I work with financial planners and it is a good relationship. We rarely suggest SMSF set up any more either as there is not much reason too anymore.
Wow Lady I sure hope your advice is a bit better than your spelling! To say a financial planner can get tax qualifications easily is a joke. It takes years of experience, similar to financial planning advice. Both are vastly different but do cross over at times. But Craig has a valid point. We accountants have the trust of the community and are relied on by our clients. It is difficult always to persuade clients to go and talk to a financial planner. They are often reluctant and have little faith in them because of things heard. Luckily I tend to use 2 in most circumstances who look after my clients. And who would not ever try and give my clients tax advice. Any who do are blacklisted by me
I think the war between financial planners and accountants needs to come to and end.Frankly if your an accountant and give financial advice you should be bound by the same requirements by documenting everything within an SOA. I also believe if financial planners are giving tax advice they should be required to have the right qualifications. I see a great opportunitiy for both industries to work well together however ego’s seem to be getting in the way.
Jason, All tax agents I know don’t give any financial advice and don’t want to. You don’t need to disclose that you are not a financial advisor if you don’t give financial advice. I’m not sure why you feel it’s ok for you to provide tax advice without proper training so long as you tell the client you are not qualified, how is that good for your client? If you are a trusted advisor they will just accept your advice regardless of any disclosure you make. What happens if you are incorrect? Just tell them “bad luck I told you not to take my tax advice” Requiring a financial advisor to get a tax agent license is overkill but so is requiring an accountant to get a FSL to recommend a SMSF. I really can see a limited tax licence being introduced by financial planners, you may see yourself as better than a tax agent but community do not. There are bad apples on both sides which both industries are paying for with more regulation.
The advice I hear from accountants is downright poor and is the reason we have so many people on age pensions. Most of it is given in a 15 minute tax return meeting. There are good reasons for licensing requirements but most accountants do not adhere to it and this says a lot about this unregulated bunch. Licensed Financial Planners provide written disclosure warnings they are not tax agents and to seek tax advice. What disclosure do accountants provide, Nil? The requirement to become Tax agents is overkill,most planners restrict tax advice to super & salary sacrifice advice and refer clients to tax agents. Most planners recognize their limitations,partly being due to the litigious nature of the industry but accountants believe they are an expert in everything including law, estate planning, investments, mortgages.They have brought this legislation on themselves. Why do we have a system where it’s almost compulsory to get a tax return completed but accountants are so unregulated.
I agree with Paul, the tax advice I have heard financial planners give is poor to say the least, once the accountants exemption to advise on SMSF’s is enforced the regulators should move straight to banning financial planners from giving any tax advice.
I’m now working in an accounting firm as an accountant after FoFa lead to the advice firm I was with to merge. After being on both sides of the ledger i can attest that SMSF are being “sold” to clients without any consideration of their suitability by accountants and frequently inappropriately, often when better options and cheaper options are available. People don’t complain about poor strategic advice or about paying too much tax but easily complain about loosing money when they get their super statements. Hence the difference between these two industries. Given this over selling SMSF are a dangerous longer implication for our social security burdens. Whilst the entry requirements to accountancy is high and to be a planner zero the ongoing regulatory requirements to provide advice are far to prohibitive and alarming frighting for tax agents. In my mind accountants are behind the times and have brought over regulation onto themselves by the over selling of SMSF structures.
ASIC has stated that the majority of SMSF are recommended by accountants. Working in an accounting firm they are oversold. The lack protection docs and the compulsory nature of our tax system is a dangerous combo.I get a mountain of paper work for a $1,000 loan but nothing for a SMSF. Why is it a requirement that you need to have a Credit license to recommend u payoff a home loan, yet tax agents are exempt? A dangerous combination. In regards to TASA,tell me the Educational institutions I should enroll in?? These are not even detailed yet. I’ve been advising clients for over 20 years, consisting of salary sac & have grad and undergraduate qualifications in accountancy and must provide recommendations in writing to salary sacrifice $1 into a super fund and won’t meet TASA licensing.Yet the 22 yr old first year Uni grad is telling clients to transfer funds to a SMSF.
It is important that accountants know about SMSFs. Some don’t but most know plenty about financial management and most have great common sense.
I think licencing is an overkill. The end result will be an extra cost to accountants and consumers.
Accountants who have little or no knowledge about SMSFs will refer to those who do know about them.
Retail funds have tried to criticise SMSFs and for reasons we all know but we all can say that lower costs in an SMSF will give a much better return and we know which companies have performed I could say much more but here is not the place
Gerard
Frankly, they are requiring licencing for accounts where we have already been providing the advice for 20 years.
And this in a history of almost no complaints.
Licencing accountants is totally unnecessary and a massive impost of extra fees which will have to be passed onto the clients.
The real answer is to extend the accountants exemption indefinitely. – but this is unlikely due to the attempt by retail funds to price SMSF out of existence.
Well Patrick it isnt just about ”affordable” advice. It is more about ”accurate” advice which I find lacking from financial planners. No accountant wants to advise on where or how to place their investment monies. that is for financial planners. But as to whether a SMSF is appropriate, financial planners do this willy nilly without much thought and I for one am one accountant sick of trying to get clients out of unwanted SMSFs forced on them by financial planners
Mr Conway:
[1] The thousands of “qualified” practictioners, if appropriately qualified, ought to be able to achieve Authorised Rep status immediately from any AFS licensee.
[2] What makes you think that accountants provide any more affordable advice than a financial planner.
If the comments above have been correctly attributed to Mr Thomas then some person should tell him to get in the real world and to ask why it is that the Accountants Exemption should be immediately removed and yet no financial advisor has to register for a limited tax agents licence for some time and have so far exemptions and yet they all provide tax advice without the correct licencing. Accountants have been handling SMSF’s for their clients for a great many years and the retail and industry funds only have themselves to blame for possibly losing clients as a result of their bad advice and support.
Mr Thomas should really get in the real world and let those who have the appropriate knowledge go about their work.
Please get the industry and retail funds to be much more transparent and to provide full details and disclosure to the members which does not occur at present.
In my experience it is financial planners who are trying to get my clients to set up a SMSF. Luckily they trust me, their accountant, more so come and ask me for advice. I am not allowed to give such advice according to financial planning organisations etc but it is time they woke up and looked at their own industry. Particularly the major banks which are making huge inroads in, in my opinion, mistakenly trying to tempt young people into SMSFs
Blatant self interest on all sides…unfortunately! Does that mean any and all tax advice has to be given by a registered tax agent? Both sides need to be careful about what they seek.