An introduction to becoming an authorised rep

Although it’s touted as the simpler licensing path for accountants, there are shortcuts and pitfalls to be aware of when becoming an authorised representative.

Most licence holders agree that accountants who are set on becoming an authorised representative before the end of the accountants’ exemption on 30 June still have time to do so. But to meet the deadline, they need to start their training within the next month.

Capstone Financial Planning managing director Grant O’Riley sees many accountants initiating or setting up their training for February and if they initiate their training or education for becoming an authorised representative by March, they should be able to make the 30 June deadline, he says.

“But any later than that, then forget it,” he warns.

According to Tony Bates of Bluepoint Consulting, the authorised representative path has, in some ways, less time pressure than the option for the accountant having their own licence since there are no major transitional arrangement benefits that will disappear after the deadline.

“The thing that really drops dead on 1 July is if the accounting practice wants to get a licence, because the next time the practice will be able to apply is three years later,” he says.

“The reason for that is the [responsible manager for the limited licence] has to meet the three-year experience requirement from that point.”

If an accountant decides they are not going to talk to anyone about SMSFs until after the accountants’ exemption ends – for example, in October – they still have the opportunity to become an authorised representative, says Mr Bates.

The accountant will, however, be unable to speak to any clients about SMSFs between 30 June 2016 and the time at which they officially become authorised.

“After 30 June 2016, an accountant can still continue with training and become an authorised representative some time down the track, but there will be conversations which previously were allowed under the accountants’ exemption which will no longer be exempt,” he says.

“The main conversations no longer exempt after 30 June are recommendations to contribute to super; to establish a super fund, insurance, bank accounts, general asset allocation; and to commence a pension or commuting a benefit.”

Regulatory guide RG146, issued by ASIC, sets out the minimum amount of training needed to become an authorised representative.

It is the AFSL’s licensee who decides the level of training needed to meet this regulatory guide’s requirements.

“At one of the larger institutions with teams of lawyers, this may be quite cumbersome,” he says. “At a smaller, independent group, this may be more flexible and fit in with their busy schedules.”

Once they have begun RG146 training, this is a good opportunity for accountants to investigate the different offers available from licence holders.

“If they do that simultaneously, then by the time they’ve finished the RG146 course, they will know which way they’re going and they will be prepared to go down that particular path,” Mr Bates says.

Once an accountant has chosen a particular licence under which to become authorised, the licensee will generally put some guidelines in place for the accounting firm to follow. When the necessary training has been completed, it usually takes around six to eight weeks to become properly authorised under a licence, but this can vary across different licences, says Mr Thompson, managing director of RISE Standards.

While there will be fewer adjustments to make in the firm compared with the practice having its own licence, certain instruments for providing financial services guides and documenting client conversations will still need to be integrated into the firm, he says.

“They’ll have to incorporate a lot more processes around capturing client conversations and what the outcomes of those discussions were,” says Mr Thompson.

Some licensees will allow the accountant to outsource some of the compliance work to them, but will provide templates or guidelines for collecting the necessary information in the initial client consultation, he explains.

The kinds of process the firm will need to adopt are usually determined by the AFSL.

More to come in tomorrow's Licensing Week bulletin. 

promoted stories

SUBSCRIBE TO THE SMSF ADVISER BULLETIN

Strategy