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Shadow shop may not show mass non-compliance

Recent research on the accounting profession performed by licensing solutions service provider Accountants’ Scaled Advice Platform (ASAP) has led the firm’s chief executive to conclude the impending Australian Securities and Investments Commission (ASIC) shadow shopping exercise into SMSF advice is unlikely to expose widespread provision of unlicensed advice by accountants.

The survey showed as at 1 July 2016, 34 per cent of respondents were already providing advice under their own licence or had authorised representatives of another Australian financial services licence holder on staff.

Of the remaining 66 per cent of accountants, the study revealed 21 per cent were using the legalistic approach of having clients sign disclaimers stating they had not received any financial advice, 35 per cent said they had ceased providing services that would require a licence and 53 per cent said they were intending to refer any clients seeking financial advice to external financial planners.

“In a nutshell it would appear accountants are taking quite a risk-averse approach to the new compliance burden, but the risk of doing that was having their client base cut,” ASAP chief executive Jim Hennington told selfmanagedsuper.

Hennington added the problematic group in regard to the provision of unlicensed advice was the 21 per cent whose clients were signing disclaimers about receiving advice, but conclusions that the group was doing anything illegal would potentially be flawed.

“Many of those accountants planned to refer clients to a financial planner for advice in addition to getting them to sign disclaimers,” he noted.

“So we didn’t really see signs of any widespread unlawful advice going on.”

Comments from survey participants showed accountants were genuinely trying to address the issue of providing financial advice to SMSFs and were not just “sitting on their hands” doing nothing, he added.

“They do think it is hard to charge fees for financial advice to self-managed clients so they say they’re going to refer it out,” he said.

“So we think the shadow shop could return a fairly clean bill of health in the end, but that’s partly because accountants are currently holding back on their services.

“So contrary to what some people are saying in the press, low levels of licensing don’t necessarily mean there’s widespread non-compliance.”

The ASAP survey took place online between August 2016 and January 2017, with responses gathered from 303 accountants.

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