The Financial Adviser Standards and Ethics Authority’s (FASEA) education reforms are proving to be the biggest hurdle for the limited licensee model, an industry expert has said.
Chartered Accountants Australia and New Zealand (CAANZ) financial advice leader Bronny Speed said the limited licensing model had never been popular but has recently become untenable for many accountants due to a number of factors, the most impactful of them being the introduction of FASEA’s latest education requirements.
“We had a situation where, in 2016, I think we would all agree that the limited licensing model wasn’t ideal, and we didn’t ideally want it, but we did think it was going to work. We did think it would enable quite a few accountants to be able to give limited advice and perhaps build their businesses from a licensed advice perspective in a limited capacity,” Speed noted during the recent CAANZ National SMSF Conference Online 2020.
“What’s then happened from an industry perspective is we’ve had a whole heap of other tsunamis hit us as well. So instead of just having the limited licensing to put up with, we then had massive super reforms which, for limited licensed people were difficult, and then more recently we’ve had FASEA step up its action.”
FASEA’s unwillingness to differentiate between practitioners with limited licenses and advisers operating under a full Australian financial services license has made a difficult situation even more problematic, Speed pointed out.
“The new continuing professional development rules, the new education rules, the new code of ethics rules, and the new single disciplinary body, as well as the limited license, plus the industry funding levy, has made it just impossible for those of you who are licensed under a limited license. And that certainly hasn’t been lost on many of us who work in this space,” she added.
In April, FASEA chief executive Stephen Glenfield said advisers operating under a limited Australian financial services licence could still play a role in the advisory landscape despite concerns the new code of conduct requirements were prohibitive for these types of licensees.
In November, the SMSF Association welcomed the release of an Australian Securities and Investments Commission consultation paper on the provision of limited financial advice and stated it would provide the regulator with methods for how this could be applied to the SMSF sector.