From 1 July 2013, accountants, other advisers, companies and
partnerships can apply for a limited financial services licence
that will allow them, their employees and representatives to
provide advice in a range of situations when dealing with
self-managed superannuation funds (SMSFs), without
holding a 'full' AFSL.
From 1 July 2016 this limited licence will replace the
accountants' exemption (regulation 7.1.29A of the
Corporations Regulations 2001), as a more restricted
licence alternative to a full AFSL. This means by 1 July 2016
advisers to SMSFs will have to consider whether they must be a
licensee or an authorised representative of a licensee.
Who do the amendments affect?
Anyone who provides 'financial product advice' will need
to have a licence or be a representative of a licensee. As
'financial product advice' is widely defined, anyone who
provides services or advice in the following areas will generally
need to have a licence or be a representative of a licensee:
establishing, operating and winding down a SMSF
investment strategies for SMSFs
contributions and pensions
rollovers, switching and consolidation
insurance - what kind, how much and whether it is held in or
out of super.
What services can a licensee provide?
Essentially, licensees with a limited licence and their
representatives will be able to provide strategic, high level
advice in relation to various financial products. They can provide
advice on all of the above services including superannuation,
insurance and basic deposit products, securities, contributions and
pensions, switching or consolidation and investing in simple
managed investment schemes such as liquid cash management trusts or
The key requirement is that the licensee only provides
'class of product' or 'non product' advice. This
means that the licensee can provide advice about a class of
products but cannot make a specific recommendation about a
For example, the licensee or representative can give a general
recommendation about term deposit products but cannot specifically
recommend that the person deposit their money into a particular
term deposit offered by a particular bank or building society.
What are the requirements to apply for the limited
Anyone can apply for the licence. To be granted the licence, the
applicant must meet training, compliance and professional indemnity
insurance requirements as detailed by ASIC and must be a member of
an external dispute resolution scheme.
Accountants should not assume that their existing professional
indemnity insurance will be sufficient for the new licence, as many
policies exclude a number of the services that can be provided
under the licence.
Are there any transitional measures?
'Recognised accountants' who apply between 1 July 2013
and 30 June 2016 do not have to satisfy the experience component
normally required when applying for the limited AFSL.
A 'recognised accountant' is a person who holds a
certificate of public practice issued by the Institute of Chartered
Accountants in Australia, CPA Australia Limited or the Institute of
These accountants must complete a knowledge update review within
three years from being granted the licence to demonstrate to ASIC
that they have the required skills to continue to hold the
From 1 July 2016 all entities who apply for the licence will
have to satisfy the full experience requirements of an AFSL.
What are the ongoing obligations of the
Licensees must lodge an annual compliance certificate (unless
they handle any client money and are therefore required to lodge an
annual audit report).
Licensees will also be subject to the consumer protection
provisions including the best interests duty introduced under the
FOFA reforms and requirements such as complying with all financial
services laws, maintaining the competence of employees and ensuring
they are adequately trained, having dispute resolution mechanisms
in place, adequate compensation arrangements for retail clients and
adequately managing any conflicts of interest that arise.
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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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