As time runs out to obtain a limited Australian Financial
Services Licence (AFSL), as an accountant, you need to act quickly
to determine your next course of action.
What you need to know:
From 1 July 2016, the accountant's SMSF exemption will
Transition arrangements, that facilitate a streamlined AFSL
application process, expire on 30 June 2016.
If you intend to continue to advise in this area, and want to
benefit from the transitional arrangements, you will need to
commence the AFSL application process by early March.
It is envisaged that ASIC will enforce strict penalties for
accountants who do not comply within the new landscape.
Accountant's SMSF Exemption ending 1 July 2016 – What
are you going to do?
From 1 July 2016, accountants will not be able to give advice on
setting up or closing down a self-managed super fund
(SMSF) unless they're covered by an
Australian Financial Services Licence
Some exemptions will continue to apply, allowing accountants to
advise on compliance and tax issues relating to financial products.
However, a Chartered Accountants article nicely highlights the
implications for any accountants:
"Arguably, any practitioner
offering business or personal financial structuring advice will
need to at least consider an SMSF for their clients and therefore
will need to be licensed or authorised in order to make a
recommendation to set one up if
The Australian Securities and Investments Commission
(ASIC) continues to issue updates about the very small
number of applications lodged by accountants for the limited AFSL -
despite the estimated 30,000 practising accountants in Australia.
One can expect that ASIC will seek to commence surveillance and
enforcement action for non-compliance.
Transitional arrangement – Why act now?
The transition arrangements that provide a streamlined
application process for accountants will expire on 30 June 2016,
after which time the application process is likely to take
significantly longer and will require additional supporting
documentation to demonstrate the required experience criteria.
Over the next month or so, accountants who haven't yet
decided whether they want to continue advising on SMSFs should
carefully consider their future approach to advising on SMSFs,
financial products and any strategic partnerships currently in
place with AFSL licence holders - including financial planners.
For those who intend to apply for a limited AFSL under the
transitional arrangement, given the time required to successfully
complete an application, ASIC warns that if you don't start
this process by early March 2016, chances are that you will not be
authorised by 1 July 2016.
ASIC Deputy Chairman Peter Kell has stated that:
"Accountants should ensure
they've allowed enough time to properly prepare an application
and to undertake any relevant training. Where an application is in
good order, ASIC can assess the application within four weeks, but
if further details are required because the information provided is
insufficient, this will take longer."2
ASIC has also confirmed that there are no plans to extend the 30
June 2016 cut-off date as there has been adequate prior notice and
time to apply for a licence.
What are your options?
Accountants currently advising on SMSFs typically have the
stop providing SMSF advice (which may involve forming a
relationship with an AFSL holder (such as a financial planner) to
continue service to clients);
obtain a limited AFSL (which also permits advising on a limited
range of financial products as well as SMSFs); or
become an authorised representative of another AFSL licence
Each alternative will have its own implications for the
relationships that accountants currently have or will have with
their existing and prospective SMSF clients.
Our experience in this area suggests that many accountants that
are looking to continue to advise their clients about SMSFs are
considering getting their own limited licence or becoming an
authorised representative. But there are also many accountants who
are concerned that the regulatory and compliance obligations and
cost will be too onerous for them, and they are therefore seeking
to find suitable referral relationships with financial
We've found that the benefits offered by the limited AFSL
can be advantageous to accountants looking to expand their practice
and advise on SMSFs as well as a broader range of financial
products such as life insurance, shares and simple managed
investment schemes. That being said, this may not be the best
approach for you.
At this time, the impending change presents both a challenge and
an opportunity for the accounting community. It will be interesting
to watch this space over the next year or so to see what the future
of SMSF advice delivery will look like.
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.Madgwicks is a member
of Meritas, one of the world's largest law firm
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