The new licensing regime: a third of the way in

Liz Westover

The one-year mark of the three-year transitional period for moving into the new limited licensing regime. There are some that will have made the decision already about how they are going to operate within the new framework, but many are still to decide.

The Institute of Chartered Accountants in Australia (ICAA) has strongly encouraged its members to take their time and not rush or be pushed into making decisions, however, the time for consideration and homework is nearly over and action needs to be taken. Some of the requirements for operating in the new licensing world, particularly training, may take time, so leaving decisions too much longer could result in delays in being able to advise clients.

What’s the decision?

From 1 July 2016, accountants will not be able to rely on the accountants’ exemption to advise clients on the set-up or closure of an SMSF. To give this type of advice, they will need to hold or operate under a full or limited Australian financial services licence (AFSL). For many accountants who do not wish to provide product advice under a full AFSL, a limited licence will likely be most appropriate.

For those accountants heading down the limited licence path, the decision then becomes whether to obtain and operate independently under their own licence or operate as an authorised representative of another licence. This would typically be an offering from one of the major financial institutions, although there are a number of other potential providers.

Significantly, the new limited AFSL will broaden the scope of advice that accountants can give beyond set-up and closure of an SMSF. Those operating in this licensing framework will also have options to provide strategic, class-of-product advice around superannuation, securities, basic deposit products, simple managed investments (as defined in the Corporations Regulations 1994) and general and life insurance. A limited AFSL will not permit specific product advice to be given to clients. Accountants will need to decide which areas they wish to advise on and license themselves accordingly.

Be informed

There is confusing information being disseminated within the industry currently about the relative merits of each option, particularly around costs associated with obtaining your own limited AFSL. While it is important to find out what options are on offer, obtaining information from a variety of sources and assessing it is equally important. The ICAA together with CPA Australia has jointly collated information for their members to assist not only in the decision-making processes but also in proceeding with each option. We have included issues to consider in choosing whether to get your own licence: cost estimates, questions to ask potential licensees and a guide to obtaining your own licence, including completing the forms. What we are providing is essentially information and guidance that would normally be sought from a compliance consultant when obtaining a licence. Members seeking this information should contact the ICAA or CPA Australia and request it to be sent to them.

Which licensing option is better?

The ICAA is not advocating that one option is better than another. Each practice will need to make the decision for themselves depending on the nature of their practice, their clients and the services they wish to offer. Some firms may not need to be licensed at all (for example, if they are only offering SMSF audit services). Remaining independent will likely influence a number of practices when making their decision. Cost may also be a major influencer, so it will be important that cost estimates from reliable sources are considered.

The information provided by the ICAA and CPA Australia to our members is one of the few sources of objective information and should therefore be mandatory reading for members in public practice.

Business as usual or opportunity

Many practitioners are looking at the new licensing regime as an opportunity to expand and consolidate on their service offerings. Others are simply looking at it as the ability to continue business as usual.

Whichever way you view it, the time has come to start making some key decisions.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital