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On 23 June 2012 the Minister for Financial Services and
Superannuation, Bill Shorten, announced that the Gillard Government
intends to introduce a limited Australian financial services
licence (AFSL) for accountants. The licence will
eventually replace the "Accountants' Exemption" that
excludes accountants from requiring an AFSL for the provision of
certain financial services to self managed superannuation funds,
and will allow for a broader range of advice to be provided than is
currently permitted under the Exemption.
This announcement follows more than 2 years of negotiations
between the Government and the professional accounting bodies,
including the Institute of Chartered Accountants, CPA Australia and
the National Institute of Accountants. It also coincides with the
passage of the substantial Future of Financial Advice
(FoFA) reforms by the Senate on Wednesday 20 June
2012. The FoFA legislation regulates the way in which fees can be
collected and disclosed by the financial services and advice
industry.
The limited AFSL will allow accountants to give broader
financial advice on self-managed superannuation funds and class of
product advice about:
superannuation;
securities;
general and life insurance;
simple managed investment schemes; and
basic deposit products.
Class of financial product advice is financial advice that does
not make a recommendation (in form or substance) about a specific
financial product. Accordingly, the accountant's AFSL will not
allow accountants to make 'specific product'
recommendations. The purpose of the AFSL is to allow accountants to
provide strategic and low-cost financial advice to their clients
about their wealth and investments, especially in rural and
regional areas where it may be difficult to access fully licensed
financial advisors.
Minister Shorten also announced that a streamlined transition
period between 1 July 2013 and 1 July 2016 will be available for
accountants who hold a public practice certificate from the CPA,
ICAA or the IPA. After 1 July 2016, accountants seeking to obtain
an AFSL will be required to satisfy the same experience
requirements as any other AFSL applicant.
Accountants that rely on the streamlined process will need to
undergo a knowledge update review at the end of three years to
ensure their skills are up to date.
Holders of an accountant's AFSL will:
be able to lodge an annual compliance certificate rather than
the annual audit required for current AFSL holders; and
otherwise be required to comply with all of the other
licensing, conduct and advice requirements to which financial
advice providers are subject (including FoFA).
Public consultation on draft regulations will commence in the
second half of this year. It is expected that up to 10,000
accountants will apply for an AFSL; it is a feature of the
announcement that compliance with the AFSL is not intended to be
onerous for members of a recognised professional accounting
body.
Hall & Wilcox has extensive experience obtaining Australian
financial services licences for a variety of clients who need an
AFSL under the Corporations Act 2001 to provide financial advice
and other financial services. We will be monitoring the progress of
this announcement and inform you of any significant updates.
In the interim, please contact a member of the Financial
Services or Tax team to discuss your circumstances.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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