The head of a financial services industry body is adamant the current licensing framework for financial advisers does not need to change in order to accommodate accountants operating in the advice space.
“I think the licensing regime is perfectly fine. The accountants’ exemption should never have been in existence, limited licensing should never have been introduced and I’m pretty sure most people who went down that limited licensing path have handed back in their ticket,” Self-managed Independent Superannuation Funds Association managing director Michael Lorimer told selfmanagedsuper.
“Under a limited licence an adviser is actually taking on more risk for no return and they’re actually more constrained than what they were under the previous regime.”
Lorimer said calls for special licensing conditions to cater for accountants who offer financial advice, mainly in the SMSF space, have arisen out of a misconception of the services that require an Australian financial services licence (AFSL) before they can be provided and those that do not. He added the situation was exacerbated by a misunderstanding of what the accountants’ exemption allowed practitioners to do.
“A lot of accountants were saying: ‘If the exemption goes, I’m not going to be able to service my 200 SMSF clients anymore.’ But things like lodging the tax return and compiling the accounts were never part of the exemption,” he said.
“They’d also say ‘but then I can’t talk to my clients about contributions’. Yes you can. You can’t tell them to put more money into their SMSF, but you can tell them what their contribution cap is for and what to subsequently do from a tax planning and pension planning perspective.
“In the vast majority of cases that has never required an exemption.”
Better communication emanating from the accounting bodies explaining to their members the services that require an AFSL would improve the situation, he said.
However, he emphasised the need to avoid any additional licensing carve-outs for accountants in the future.
“If you have carve-outs and exemptions, that just leads to greater complexity and ambiguity and people don’t need that,” he said.
To this end, toward the end of last year Chartered Accountants Australia and New Zealand, CPA Australia and the Institute of Public Accountants joined forces to establish a better licensing solution that would also cater for accountants. The SMSF Association and Financial Planning Association also became part of the combined working group soon after.