SMSF advice and training requirements

Liz Westover

Chartered Accountants Australia and New Zealand has been strongly urging its members to progress their decision-making around if and how they intend to operate under the new limited licensing framework. With the removal of the accountants’ exemption from 1 July 2016, anyone wishing to recommend the set-up or closure of an SMSF as well as other non-product strategic advice will need to be licensed or authorised to do so.

With over 18 months until the accountants’ exemption ceases to exist, many are asking why the hurry to make a decision?

There are two main reasons why decisions and actions need to occur sooner rather than later.

Transitional arrangements are available for recognised accountants up to 30 June 2016. These arrangements, which recognise a certificate of public practice (CPP) as demonstrating relevant experience requirements for responsible managers, will be unavailable after that date.

This is particularly important for anyone seeking their own licence (as opposed to operating as an authorised representative of another licensee).

The second and probably most important reason is the training requirements. These will apply to everyone seeking to give advice, whether they apply for their own licence or operate as an authorised representative of another licensee. Training can take time and this is why decisions need to be made now so that time is available to undertake the training before applying to the Australian Securities and Investments Commission (ASIC) for a licence or operating under another entity’s licence.

What training is required?

Most people wishing to operate within the new limited licensing framework will need to undertake some form of training. Exactly what training will be determined in part by existing education and qualifications.

Ultimately, ASIC will need to be satisfied the person giving advice has satisfied the requirements under Regulatory Guide (RG) 146 for the specialist knowledge areas in which they are intending to provide advice. Additionally, licensees’ responsible managers will need to meet RG 105 requirements.

When appointing an authorised representative, some licensees may not recognise training from all RG 146 training providers.

Furthermore, some will require additional training to the minimum RG 146 requirements. It is a good idea to check with potential licensees about their specific requirements when conducting due diligence on them.

Key points to remember

ASIC considers the currency of RG 146 training completed.

Where training is more than five years old, for example, you may need to demonstrate that relevant continuing professional development (CPD) was maintained in the interim period.

You need to be RG 146 compliant only in the areas in which you wish to give advice. If, for example, you do not wish to be licensed for securities, then training in securities is not required.

However, in order to best service clients, training in all areas is recommended. RG 146 training must be completed before lodging a licence application with ASIC. The regulator will require evidence of successful completion to be lodged with an application.

Responsible managers and RG 105

Where accountants are applying for a limited licence during the transitional period, ASIC assesses knowledge and skills of responsible managers under options three and four of RG 105.

Responsible managers must hold some form of qualification. If they currently hold a degree, they will only need to undertake a short course in the areas of advice for which they seek to be licensed. If, however, they do not have a degree, they will need to gain an industry or product-specific qualification.

Ongoing training?

Ongoing CPD features as a requirement for most professionals and industry association members. This will be the case for licensing purposes as well.

If you intend becoming an authorised representative of another licensee, you may want to find out whether they will recognise training from your existing membership organisation, including Chartered Accountants Australia and New Zealand. You should also ask what training they will be offering you (and at what cost) under their licence.

Other considerations?

A range of issues needs to be considered when making decisions about how to operate in the Australian financial services licence world. Chartered Accountants Australia and New Zealand and CPA Australia have extensive resources available for their members and strongly encourage members to use these resources throughout the process.

They can be located on the Chartered Accountants website, www.charteredaccountants.com.au/accountantsexemption, with additional materials available for CPP holders upon request from [email protected] or [email protected].

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