Ron Lesh said he’s in talks with practitioners who are in favour of replicating the conditions of the accountants exemption, which permitted accountants to provide basic SMSF services without requiring an AFSL.
The accountants exemption, which was phased out in 2015, made way for the unpopular limited licence option. It permits accountants to provide limited advice services, including SMSF advice, but continues to fall flat and create unworkable situations with SMSF clients.
“This is just about making it work. What we have now is simply not working, and it won’t work. We always knew it wouldn’t, it’s not how this space works,” Mr Lesh told SMSF Adviser.
Mr Lesh plans to approach Minister for Revenue and Financial Services Kelly O’Dwyer, much like he did when the ATO’s portals were going through a period of extreme instability last year.
This is not the first time scrapping the limited licensing regime has been raised. For one, Mayflower Consulting director Sarah Penn said there’s a clear business case for ASIC to bin the limited licence, given the take-up has been well below projections.
“I do wonder whether ASIC in the next five years or so will actually remove the limited licence altogether because the take-up has been marginal and there’s been so many implementation issues with it in terms of how you operate under a limited licence,” Ms Penn said last year.
“This would be fine if it was an industry-wide thing and everyone had this new licence [because] ASIC and industry would then have to figure out how to make it work, but there’s only a few hundred licences out there,” she added.
These predictions are compounded by the struggles dealer groups are having with authorising accountants, who are not akin to the makings of the AFSL environment like financial planners.
“This is an issue for the wider planning community as well. Most of the big dealer groups are really starting to cut down on the number of people that they licence,” Ms Penn previously told SMSF Adviser.
Licensing for Accountants chief executive Kath Bowler has been finding for at least 18 months that many accountants are unsettled in the dealer group environment, particularly when their independence is called into question.
katarina.taurian@momentummedia.com.au
The Royal Commission speaks for this issue quite clearly. Organisations without “professional ethics” will serve themselves and not the client’s best interest.
Superannuation legislation and rules should be “wisely” simplified to enable practicing Accountants to provide factual information and options for their clients to consider. The current maze of legislation only provides loopholes for the Financial Planners .
The Corps Law regime is not perfect but, I think Accountants only have themselves to blame for the current position. CPA made a failed attempt to enter the space. Why didn’t it work? Perhaps this should have been done as a joint project with CAANZ (ICA at the time) as CAANZ have a (relatively) high proportion of public practice members. But, the old Mexican stand-off between the bodies got in the way of potentially dealing Accountants into the game.
Let’s hope the CAANZ & CPAs support Ron, instead of hiding under the bed like they did the last time when this whole mess first unfolded.
Yes, lets hope. Its a bit said that our hopes reply on a software provider rather than the accounting bodies we pay to be members of….
Our clients what information. Prior to this licensing we provided clients with information on how pensions work and pros and cons etc, what a SMSF does etc. They received information that they could then make an informed decision about. They were always advised that we cannot tell them what to do, its their decision. If they wanted specific advice they had to see a financial planner. Our clients were happy to be given the information and make their own decisions. Now we can’t say boo as it may be [b]perceived[/b] that it is advice even though its just factual information. All our SMSF clients are not happy with this structure. They ask us a question and we have to tell them that they must complete a fact find and then we prepare a SOA and once the advice is approved we can talk to them. Clients don’t want to do this process, even if we charge the Advice for only $200. So they end up with NO advice. That’s not in their best interests.
A new client with $20000 in a SMSF and two members over 65 not contributing, no income earning assets needs a SOA to be told to wind it up. If they don’t want to spend the SOA fees for that advice they get no advice and continue to have their funds drained by accounting and audit fees. This is what we are seeing.
I feel as an accountant I am gagged. I cannot tell my clients simple things without the fear of do I need a SOA for this? Will they perceive something I say to be advice? Its so time consuming and in the end I’m not seeing the benefit to my clients and neither are they. And if you read the SOA’s our licenser’s software spits out its all automated. Its ridiculous. How can something so automated be specific to one’s personal situation??
Those accountants you talk about that gave illegal advice are cowboys in the industry. Every industry has their cowboys, even financial planners. The accountants I know and my own practice abided by the exemption rules. This licensing debacle was brought in to stop the cowboys. My guess is those cowboys are still doing what they want. All of us that were doing the right thing are the ones that are having to deal with this licensing process. I’m all for bringing in harsher penalties to accountants that go beyond the exemption but I don’t believe this limited license is working.
Exemption? YES PLEASE!
We have had an accountant for many years. He keeps up to date. He abhors “creative accounting” and lets us know if any of our ideas would be frowned upon by the ATO or not in the right spirit. At the same time he used to advise wisely within the rules. He never initiated investment decisions to us but encouraged us to discuss our ideas beforehand with him.
As such he has our full confidence.
Advisors with certificates messed us up royally in the past.
Under these circumstances, [b]why can’t we SMSF members and trustees advise the ATO/regulators that we wish to nominate who we want as advisor as well as accountant and thereby accept that the [i]responsibility then lies with us[/i]? It is our assets in the fund after all ! [/b]
The reinstatement of the accountants exemption would be a huge mistake.
Accountants need to face up to the reality that SMSFs are a defined product and if you want to get be involved in the establishment of SMSFs, discuss income streams etc then you must be licenced.
I concur with Warrens comments that under the limited licencing regime accountants treated it like a full licence & ASIC seemed powerless or unwilling to enforce. A single licencing model model should enable better monitoring & regulation.
It would be a “courageous” decision for the government to reduce regulatory oversight in these time when there is so much scrutiny on the future of financial advice.
Ok Ron let’s go back to the exemption where accountants were allowed to open and close a SMSF without AFSL advice or compliance.
But Ron, almost every single accountant in the SMSF exemption space went WAY BEYOND the exemption and provided bucket loads of illegal AFSL SMSF advice with zero AFSL compliance.
From rollovers (often with the ignorant loss of existing Life insurances) and death benefit nomination advice at SMSF set up. To ongoing contributions, TTR & ABP pension set ups and not to mention tax effective investments at 10% commission.
The problem with the accountants exemption is most accountants treated it like a complete full exemption to provide what ever SMSF AFSL advice they wanted to provide with ZERO AFSL compliance.
And ASIC did not ever bust 1 single accountant for all these AFSL illegal advice breaches.
Easy to see why accountants want that unfair AFSL playing field back.
Ok Ron let’s go back to the exemption where accountants were allowed to open and close a SMSF without AFSL advice or compliance.
But Ron, almost every single accountant in the SMSF exemption space went WAY BEYOND the exemption and provided bucket loads of illegal AFSL SMSF advice with zero AFSL compliance.
From rollovers (often with the ignorant loss of existing Life insurances) and death benefit nomination advice at SMSF set up. To ongoing contributions, TTR & ABP pension set ups and not to mention tax effective investments at 10% commission.
The problem with the accountants exemption is most accountants treated it like a complete full exemption to provide what ever SMSF AFSL advice they wanted to provide with ZERO AFSL compliance.
And ASIC did not ever bust 1 single accountant for all these AFSL illegal advice breaches.
Easy to see why accountants want that unfair AFSL playing field back.
To reinstate the exemption for Accountants would be a backward step for the financial planning industry and for client’s best interest. This move only benefits the accountants. The clients would be better served seeing both an accountant and a financial planner when it comes to SMSF. That would provide balance and checks for both professionals. Partnership is going to be the key here not a watering down of the licensee requirements or providing exemptions. How many other industries have one profession asking for exemptions to provide advice in a completely different profession? None that I am aware of. Let’s keep things moving forward…do not allow exemptions and remove ‘general advice’.
Great job Ron at least someone is sticking up for us Accountants