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Accounting, Insurance

PI concerns over relaxed advice

professional indemnity advice

Accountants who intend to provide financial advice without holding an Australian financial services licence, under eased compliance rules announced last week need, to ensure their professional indemnity (PI) insurance covers this activity, a technical expert has warned.

Referring to the temporary rules announced by the Australian Securities and Investments Commission (ASIC) last week in relation to the coronavirus pandemic, Smarter SMSF chief executive Aaron Dunn said: “[With reference to] accountants that aren’t licensed, they are going to need to explore [their existing cover with] their PI insurer because they’re going to have the ability to provide advice – [an activity] specifically excluded from their policy.

“This is just to get some form of confirmation that they would be able to, obviously, operate in this landscape,” he added, while participating as a panellist in the SMSF Association’s latest COVID-19 webinar today.

Dunn pointed out conversations he had already conducted with accountants in this situation indicated current professional indemnity policies would allow them to provide COVID-19-related advice without being licensed, but recommended accountants still examine the issue.

SMSF Association chief executive John Maroney confirmed the professional body’s affiliated PI insurance provider said it would cover its members facing these circumstances.

“We have had a chat with Indemnity Solutions and our understanding is the coverage there would extend to all of our members that would be eligible to use these relief arrangements,” Maroney said.

“But I’d encourage anyone that’s particularly interested [in providing advice under these measures] to check the policy and talk directly to the insurer because it is an area that is important to make sure is appropriately covered.”

Fellow panellist SuperConcepts technical education services general manager Peter Burgess added tax agents looking to provide advice also needed to take into account best interest duties as defined by corporations law.

“That may be a little foreign to some tax agents. I know tax agents have always needed to act in the best interest of their clients under the Tax Agents Services Act and the code of professional conduct that applies under that act,” Burgess said.

“But the corporations law best interest duty obligations are much more prescriptive. So, for example, when talking to clients about the early release [of super] measure, there’s a need for the tax agent to form an opinion based on the client’s financial situation and objectives.”

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