Encouragement from the major accounting bodies for members to apply for their own licence to enable them to provide financial advice to their existing SMSF clients was a concern as the intricacies of being a licensee were largely being ignored in the discussion, according to a senior industry executive.
“For some reason the accounting associations believe getting your licence upfront is a good thing to do,” head of AMP-owned SMSF Advice Stuart Abley told the Institute of Public Accountants National Congress in the Hunter Valley on Friday.
“It worries me because I’ve been a responsible officer for 15 years of licences and dealt with ASIC (Australian Securities and Investments Commission), forensic audits, dealt with FOS (Financial Ombudsman Service), client complaints and I can tell you there are a whole lot of licensing requirements they don’t talk about.
“And the reason they don’t talk about them is because they don’t understand it because they’re not a licensee.”
Abley warned if accountants chose to become a licensee themselves, they would need to ensure they had the appropriate management structures in place to fulfil the compliance obligations associated with owning an Australian financial services licence (AFSL).
“You’ve got to have all the adequate systems and processes, risk management, compliance plans, complaints processes in place, financial resources and support for the advisers in your business in place,” he said.
When choosing between becoming a licensee or an authorised representative of an existing licensee, he said accountants had to consider the core activity of their practices and whether or not that was providing financial advice or supporting an AFSL.
“There are accounting firms that I know that have got their own licence, but have full-time people running the licence.”
SMSF Advice regional development manager for Victoria, Western Australia and South Australia Mark Hannan said many activities could be outsourced in an advice practice, but the duties of the responsible manager of a licensee could not be treated in that manner.
Hannan said accounts would be able to provide the SMSF advice they wanted, regardless of whether they were a licensee or an authorised representative.
Abley stressed if accountants did decide to become authorised representatives, they needed to carefully consider the scope of advice they would be allowed to provide under the different existing licensees in the market.
