The latest round of legislative instruments and the updated standard blueprint from the Financial Adviser Standards and Ethics Authority (FASEA) provide little to no help to those providing SMSF advice under limited licences, according to wealthdigital.
“Unfortunately, it appears that those using the limited licensing regime, such as accountants, as well as those giving advice only in a narrow range of areas, are still not catered for by FASEA’s approach,” wealthdigital technical manager Rob Lavery said.
“Nothing in FASEA’s approach to the higher education requirements, adviser exam or continuing professional development framework suggests the workload will be tailored to the adviser’s authorised areas of advice or limited scope of advice.”
Lavery said the one detailed policy released by FASEA last Friday seems to confirm this.
“FASEA issued a draft legislative instrument on the professional year that will make it a requirement for all new advisers who join the industry from 1 January 2019,” he said.
“The requirements under this draft instrument would lock out all but the most persistent of professionals looking to add financial advice to their suite of client services.
“The professional year will be a resource-intensive process, not just for the new advisers but for their required supervisor and Australian financial services licensee.”
He said he believes professionals with an existing practice and client base, such as accountants, will struggle to meet the requirements of the professional year.
“The requirement to undertake 1500 hours’ worth of supervised work, as well as 100 hours of formal training, will be too much for most professionals and their licensees to invest in,” he warned.
“Administratively, the professional year is an arduous process. From the planning to the execution and documentation, it requires a large commitment.”
In addition, the professional year will likely see a de facto cap put on the number of accountants working under limited Australian financial services licences, he noted.
This, in turn, will limit the options Australians have when seeking advice, particularly as it pertains to their superannuation and retirement, he said, adding this outcome was not the intent of the original reforms.
“Ultimately, those providing advice under limited Australian financial services licences have not been identified as a major source of poor advice or consumer loss,” he noted.
“To render the limited licensing regime invalid through over-regulation is an effect that needs to be reconsidered.”