This is the second blog of the series which demystifies the
changes that will result from the end of the accountants'
"SMSF recommendation" exemption by explaining what
licence you will need. Read the first blog
If you are an unlicensed accountant who recommends the
establishment or wind-up of SMSFs and plans to continue doing so
after 30 June 2016, you will need a limited or full AFSL. Here we
will consider limited AFSLs.
The limited AFSL also allows you to broaden your advice-giving
authority. In addition to continuing your existing SMSF
establishment and wind-up advice and dealing practices, you can
apply for new "class of product" authorisations. A
limited AFSL will enable you to provide class of product advice
about securities, superannuation, general or life risk insurance,
simple managed investment schemes, and basic deposit products.
Treasury provides the following examples of advice you can
provide under a limited AFSL:
advice on the sorts of life insurance cover (for example, life
cover, total and permanent disability cover, trauma cover and
income protection) that would be appropriate for a client in light
of their relevant circumstances (for example, their existing level
of cover) and whether they should hold the cover directly or
through a superannuation fund;
advice on which simple managed investment scheme would be
appropriate for and in the best interests of a client – for
example, cash funds versus equity funds;
advice on whether shares are an appropriate investment option
given a client's relevant circumstances including their
tolerance for risk and whether alternative classes of product might
be more suitable; and
advice on the types of basic deposit products that would be
appropriate for and in the best interests of a client saving for a
home deposit (for example, term deposits, online savings accounts
or first home saver accounts).
You can also continue to provide some advice about direct real
property (because this is not a financial product) and taxation
advice (if you are a registered tax agent).
Deadline – 30 June 2016
If you decide to apply for a limited AFSL, you need to be aware of
the transition deadline. If you have not submitted your application
by this date, you must stop providing any financial services until
your application is approved. Given the large number of
applications that we expect to see in 2016, we recommend that
accountants apply for a limited AFSL in the second half of
ASIC has also outlined some transitional provisions that will
assist accountants to obtain AFSLs. All licensees need Responsible
Managers (RMs) to prove to ASIC that the business has the
competence to provide the financial services. ASIC's RG 105
sets out that, at a minimum, to be nominated as an RM you will need
to have at least 3 years' regulated experience over the last 5
years in the specific financial services you wish to provide, as
well as certain qualifications. This can be a hurdle – even
for highly experienced advisers. But, as part of the limited AFSL
transition provisions, ASIC has relaxed this requirement. If you
apply for a limited AFSL and your RMs are accountants who hold
practising certificates, then they will not need to meet any
additional experience requirements.
Applying for a limited AFSL
The process of getting a limited AFSL is very similar to getting a
full AFSL – see below for details.
The main difference is that recognised accountants don't
need to submit a phone-book sized summary of relevant experience.
Instead, they just need to provide evidence of their accounting
qualifications. Beware! If you don't apply for a limited AFSL
by the 30 June 2016 deadline, you will not be able to rely on this
exemption and you may find that your proposed RMs are rejected by
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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