A revised competency model for accountants is needed to slow the number exiting the current limited licensing regime imposed by the Financial Adviser Standards and Ethics Authority, according to an SMSF expert.
Smarter SMSF chief executive Aaron Dunn said a model providing a higher level of regulation for the accounting services provided to SMSF trustees would be a better alternative.
“The outcomes from introducing limited licensing have clearly not achieved their policy intent, so against the backdrop of the royal commission it provides a perfect opportunity to re-explore the policy setting to ensure that advice is not only encouraged, but is readily available for those who need it at different stages of life,” Dunn said in a blog post on the Smarter SMSF website.
He cited the ATO’s “SMSF Statistical Overview 2016/17”, which revealed 65 per cent of tax agents catered to 9 per cent of the SMSF population, while the remaining 35 per cent of tax agents dealt with 91 per cent of SMSFs.
“This statistic alone in my view paints a highly important challenge for the regulator in dealing with (risk rating) service providers and their ability to support trustees in meeting their obligations within the SMSF environment,” he said.
He recommended a competency model for accountants regulated by an industry body such as the Australian Securities and Investments Commission (ASIC) or Tax Practitioners Board. A model based on a threshold of the number of funds accountants looked after would be a suitable alternative to the current system, he added.
“Let’s say 20 funds, you would need to sit a competency exam to demonstrate a relevant skill set to continue to service SMSF trustees, and only through the accredited process would individuals be able to rely upon any specific exemptions to discuss strategic issues such as making contributions, starting pensions and the like,” he said.
“This to me is the perfect ‘carrot and stick’ – enable some more rope for accountants to engage in conversations with your SMSF clients, but ensure that the regulator has greater powers to take action in the event of inappropriate outcomes.”
Statistics released by ASIC earlier this year showed applications for limited licences continued to remain low.