Accountants aiming to operate under a limited Australian financial services licence (AFSL) need to know exactly how specific product advice affects them in order to define their activities legally, according to an industry lawyer.
Speaking at the Perpetual Responsible Manager Masterclass in Sydney last week, The Fold solicitor director Jaime Lumsden Kelly used the situation where a person rolls their existing superannuation benefits into a newly established SMSF as an example of a transaction that was more complex for an accountant with a limited AFSL than would appear on the surface.
“Just remember, you can’t recommend that the client close the existing super fund. You don’t have that advice authorisation,” Lumsden Kelly warned.
“You can only give advice on the existing superannuation fund to the extent necessary to recommend that an SMSF be set up. You can’t recommend that [the other fund] be shut down.
“Part of that is because there could be life insurance in there and you can’t advise about that life insurance and what [the client] is going to do going forward.”
She added accountants would need to refer any advice on the closure of a previous superannuation fund membership to a practitioner operating under a full AFSL and most importantly would need to make the client aware of the situation.
“Just be aware that’s a trap you could potentially fall into,” she added.
The example raised by Lumsden Kelly was one of many problems her firm had discovered about the practicality of providing advice under a limited AFSL.
“The more that we have been digging through it ourselves, and working out how to do statements of advice for accountants, the more practical difficulties we have encountered,” she said.
“Whether that’s an oversight or a lack of investigation into the way that accountants are actually conducting their practices and missing that particular detail, I don’t know.
“But this is actually the regime that is coming in, so they’re things accountants need to be aware of.”
