With just over seven months until the accountants’ exemption is repealed, there is definitely an increased focus from professional accountants on the reform and how they will address the change come 30 June 2016.
However, a stronger focus on the reform has also led to an increase in the level of confusion, which will no doubt continue to rise as the deadline approaches and time runs out.
In part this is not a surprise. More often than not when talking to a professional accountant, they have already spoken with their colleagues, been consistently approached by numerous Australian financial services (AFS) licensees and even training providers, all of who have provided different guidance as to what they should do. Add to this the mixed messaging through online media and the result is total confusion on what is actually changing and what options are even available.
So come 30 June 2016, what actually changes?
The accountants’ exemption, being regulation 7.1.29A of the Corporations Regulations 2001, will be repealed. This regulation currently permits a recognised accountant to recommend a client establish or wind up an interest in an SMSF, without being licensed under the AFS licensing regime.
That’s it. It does not permit a recognised accountant to make recommendations regarding pensions, contributions or provide SMSF investment strategy advice. This is already licensed advice.
This does not mean a professional accountant cannot provide any advice or services in regards to pensions, contributions or investment strategies for an SMSF. On the contrary, professional accountants do and can continue to provide factual advice, compliance, audit, administration and taxation advice and services.
Importantly though, taxation advice cannot be used as a pretext for providing financial product advice. The advice must relate to the taxation consequences of the financial product, which includes an SMSF, and should not extend to be used to recommend a particular product or strategy.
So if you are a professional accountant, uncertain about your options or not sure what to do next, don’t worry, you are not alone. However, time is fast running out, so here is my advice for moving forward and making some decisions.
1. Decide what advice you want to provide to your clients in the future, don’t just think about what you are doing now. If you are considering becoming licensed to just continue providing SMSF establishment or wind-up advice or only provide this advice occasionally, then I think you should reconsider your decision.
2. If you want to provide SMSF establishment, wind-up and other related advice, such as pension and contribution advice, then you need to be licensed. Your options are to become an authorised representative of another entity’s AFS licence or apply for your own limited AFS licence.
If you are going to apply for your own limited AFS licence, you need to lodge your application before 30 June 2016. Refer to your professional body for resources, take the time to complete your application and, importantly, do not apply before you meet the training requirements.
3. If you need to be licensed, start your RG 146 training now, even if you are not sure how you are going to be licensed.
If you are going to be licensed as an authorised representative, then check with your prospective AFS licensee what training you need to do. If you are still considering your options, then ask your professional body for guidance.
Importantly, if you are applying for your own limited AFS licence, you are responsible for ensuring the provision of compliant advice – so make sure the course you choose is robust enough to provide you with the depth of knowledge and skill you need to meet this obligation.
4. If you’re not going to be licensed, make sure you have a referral solution in place for your clients and seek guidance from your professional accounting body on what advice and services you can continue to provide.
We all know this reform represents a significant change for accountants, but it also represents an opportunity. Professional accountants often tell me their clients need advice, but their client will not go and see a financial planner, or they did and received poor advice. Well, if you become licensed, you can provide this advice to your client and improve their financial well-being as their trusted adviser.
The bottom line is that, with time running out, if you don’t act now, you may miss the opportunity.
