(AFSL), which broadens the type of strategic, non-product advice accountants can provide clients, began operating on 1 July. As is well known, it exempts accountants from acquiring an AFSL for services they provide relating to the setting up and closing of SMSFs up to 30 June 2016, as well as allowing accountants who are competent in providing strategic and SMSF advice enough time to comply with the new regime.
As we enter this transition period, the SMSF Professionals’ Association of Australia has received many inquiries about the new regime. Below are the answers to some of the more frequently asked questions.
Who can apply for the limited licence?
Accountants and other advisers can apply for the new limited licence, however, the Australian Securities and Investments Commission (ASIC) is able to approve a limited licence on the basis of whether the applicant meets its existing training requirements to hold a licence to provide financial advice, and whether the applicant has the necessary experience to provide the type of advice available under the limited licence.
When can I apply for the limited licence?
The starting date of the limited licence was 1 July,
so accountants and other advisers can apply to
ASIC now.
What advice can I provide?
Accountants and other advisers who hold the limited licence will be authorised to provide financial advice on SMSFs and their clients’ existing superannuation and class-of-product advice about:
- securities,
- simple managed investment schemes,
- general and life insurance, and
- basic deposit products.
Accountants who hold the limited licence will be able to make recommendations in relation to the client’s existing superannuation funds to the extent needed when making a recommendation to establish an SMSF or when providing advice to clients on contributions or pensions. This will facilitate the provision of switching or consolidation advice involving SMSFs.
In addition, accountants with a limited licence will be authorised to deal, or arrange to deal, in a financial product to the extent necessary to set up an SMSF.
Importantly, anyone making switching or consolidation recommendations involving SMSFs will still need to meet the obligations on superannuation switching and the best interests’ duty in sections 947D and 961B of the Corporations Act.
If I don’t provide financial advice to my clients, will this affect me?
You will be affected if you provide advice to your clients regarding setting up or closing down an SMSF. Under the Future of Financial Advice (FOFA) reforms, you will not be able to provide this advice without either a full or limited licence from 1 July 2016. Holding a limited licence means you will be able to legally discuss all aspects of superannuation, rather than just an SMSF. You will be able to discuss the broad insurance and financial advice needs of your clients. An alternative to becoming licensed in your own right would be to become an authorised representative of a licence holder.
What training requirements will I need to meet
Accountants and other advisers will need to comply with the relevant training and education requirements prescribed in ASIC regulatory guides (RG) 146 and 105. This will ensure that only accountants with appropriate skills and knowledge are authorised to provide financial advice under the new authorisations.
By entering into the licensing regime, it will also be necessary for accountants to be familiar with the requirements of the FOFA reforms, which include measures around conflicted remuneration structures, best interests duty, an opt-in obligation that requires advice providers to renew their clients’ agreement to ongoing fees every two years and enhanced powers for ASIC.
What experience requirements will I need to meet?
During the transition period of 1 July 2013 to 1 July 2016, streamlining arrangements will be available to accountants who hold a public practice certificate from one of the professional accounting bodies.
These arrangements will remove the need for ASIC to consider whether each individual accountant has the necessary experience, as outlined in RG 105, to provide the kinds of advice covered under the limited licence, making it easier for them to obtain a limited AFSL. After 1 July 2016, accountants seeking to obtain an AFSL will be required to satisfy the same experience requirements as anyone else.