The client status restrictions associated with the new compliance rules governing the provision of advice regarding the early access to super benefits to combat the effects of COVID-19 are causing some confusion among practitioners.
“We’ve received lots of questions about [whether] the measures apply to both existing and new [clients] or only existing clients,” SuperConcepts technical education services general manager Peter Burgess said during the SMSF Association’s latest COVID-19 webinar.
To clarify the situation, Burgess stipulated if a registered tax agent is providing advice about the coronavirus instrument allowing individuals early access to their superannuation, then the person receiving the advice has to be an existing client.
“So the tax agent would’ve had to have provided some form of tax service before the instrument was introduced,” he noted.
Burgess pointed out, though, if a licensed adviser is providing early super access advice, after an individual has instigated a discussion around the measure, then the person being advised does not have to be an existing client.
He did, however, identify an additional layer of complexity arising from the provision of COVID-19-related advice.
“Where it does get complicated is if the client wants advice around other financial matters – urgent advice that has come about as a result of the COVID-19 economic turmoil,” he flagged.
“Then the adviser can give advice on those matters, but [the client] will need to be an existing client [to whom] the adviser has previously issued an SOA (statement of advice) and the advice needs to be of a class of product [the client has] previously sought advice about.
“So there’s a subtle distinction there. It could be the case that the client has a meeting and wants to speak to the adviser because they’re in financial distress and they want to access some funds from somewhere, they don’t know where, but they do need to access some funds.
“Now in that scenario the adviser can discuss the different options available to the client, they can even recommend that they do take money out of super under the early release measure, but they can only do that if [the client] is an existing client.
“If [the client] was a new client, then that conversation around the early release would need to be instigated by the client. There’s a bit of a difference there.”
