An audit expert has said unlicensed accountants must take even greater care when providing execution-only services to their clients in the midst of the banking royal commission as it still may be taken as advice.
At the Institute of Public Accountants 2018 National Congress in Sydney last week, BDO Australia partner Shirley Schaefer used the outcomes of the Australian Securities and Investments Commission’s (ASIC) “Report 575 SMSFs: Improving quality of advice” to remind unlicensed accountants of the risks in relation to setting up funds for clients.
“When it comes to the use of external advice and setting up an SMSF, the two frontrunners are individuals using a financial planner or their accountant,” Schaefer said.
“But the finding that worries me the most is whether the member or members receive a statement of advice (SOA) – from a financial planner, almost 80 per cent of their clients did receive an SOA around setting up an SMSF. But under 50 per cent of clients received an SOA from their accountant.
“ASIC has still got a very big push on unlicensed accountants providing advice, in particular to set up SMSFs, but also around providing advice for the actual fund itself.”
She said she suspected the percentage of SOAs from accountants was low as they believe they are acting on execution-only wishes, but added caution was now necessary.
“So when a client comes to you and says they want an SMSF, the accountant isn’t giving advice nor has to provide an SOA,” she noted.
“I’m a big believer in execution-only, but given the space we’re in at the moment with the superannuation and advice industries, and with SMSFs and the banking royal commission, what I’d say to accountants who aren’t licensed is to be [aware] of what your clients think you’re saying to them because at the end of the day, if they say their accountant told them to set up an SMSF, it’s not actually going to matter what happened unless you’ve got really clear documentation.
“It will be the client’s perception that ASIC could run with.”
The ASIC report was released in June and its findings were based on a review of 250 files.
It assessed whether advice providers are complying with the law when providing personal advice to retail clients to establish an SMSF.