Accountants are jeopardising their role as the trusted adviser for SMSFs by not embracing the licensing regime following the removal of the accountant’s exemption and with financial planners becoming more willing to adapt to new education standards and other regulations.
That was the warning from Licensing for Accountants founder and chief executive Kath Bowler, who said financial planners have realised the need to increase their service standards in light of the Financial Adviser Standards and Ethics Authority (FASEA) issuing new education and professional standards, and inquiries such as the royal commission into banking and financial services.
“I think there’s a risk that if the accountants do not get their act together, they will not be able to play in the advisory space,” Bowler told the recent SMSF Association “Accountants and SMSFs – what lies ahead?” roundtable.
The roundtable, conducted as part of the association’s inaugural SMSF Week last week, also heard from Bowler that the accountants’ licensing regime requires urgent fixes to tackle the issues hindering accountants from advising SMSF trustees and members.
“Unless there are some practical solutions moving forward, [accountants] are going to lose that space to planners because they’re kind of getting their act together,” she said.
She said following the removal of the accountants’ exemption, the Australian financial services licence models, both full and limited, have not worked efficiently.
Furthermore, she said she had observed some accountants hesitating to work under an institutional firm’s licence as they fear they will have to sell products.
In terms of working under the authorised representative model, she said some were given absolute freedom without monitoring, which led to their collapse.
On the other hand, some organisations, such as CPA Australia’s CPA Advice, had excessive checks and balances in place to manage risk and never gained momentum, she said.
“I think also [accountants] are still so busy with their accounting work they struggle to seize the opportunity of having a licence,” she noted.
“They’re still using it in a reactive way and they’re constantly seeking opportunities to get out of licensing, instead of getting the most out of licensing.”
One reason accountants are trying to exit licensing frameworks is because they cannot operate efficiently and profitably, she added.