The Self-Managed Superannuation Fund Professionals’ Association (SPAA) has recommended abolishing the accountants’ exemption from the Financial Services Reform Act (FSRA) and replacing it with a new category of restricted license.

The so-called Self-Managed Superannuation Specialist – Restricted (SSR) license category would enable its holder to advise on different types of fund – industry, retail, public sector, self-managed and retail – and be administered by the Australian Securities and Investments Commission.

The proposal to introduce the new category of license will be included in SPAA’s submission to the third phase of the Cooper review of the superannuation system.

The proposal received a guarded response from the chairman of ASIC, Tony D’Aloisio.

The chairman of SPAA, Sharyn Long, said it is clear that the accountants’ exemption had not worked.

“It’s obviously caused confusion,” Long said. “One of the big criticisms about it is that an account can advise on setting up a self-managed super fund, but they can’t advise on why you would set up a self-managed super fund in preference to one of the other options.

“The criticism of the accountant’s exemption is, how can someone give advice about a self-managed super fund when you’re not really comparing the market?

“What we’re advocating is accountants would have a restricted license arrangement, hence the SSR, and we would model that on the SSA program but it would be less onerous, or limited to the fact of giving advice on the products that are in the marketplace and why someone would establish a self-managed super fund.”

The SSR license would not allow an accountant to give investment advice to the trustees or members of  SMSFs. To do this, an accountant would still need to be fully licensed.

The chief executive of SPAA, Andrea Slattery, said the SSR would restrict accountants to advising on the pros and cons of different categories of super fund.
“It would all be around the structure,” Slattery said. “It would be looking the five structures of super – industry, corporate, retail, public and self-managed – and it would allow someone to provide correct advice, so the consumers aren’t disadvantaged in that area.”

Long said the SSR would address concerns that accountants are pushing clients into self-managed super funds in circumstances where an SMSF may not be appropriate for them, simply because that’s the only type of fund an accountant can advise on.

“They’re not able to give advice on an industry fund or a corporate fund, or whatever,” she said.

“There should be licensing of accountants who wish to give structural advice, or advice on the type of fund a member should be part of. And we believe that will be done through an ASIC licensing process, but not a full FSR license. If they want to give investment or product advice, they would need to have an FSR license.

“We’re saying that accountants do fulfill a role in advising people about their superannuation entitlements; and so, we’re thinking it would cover off on things like awareness of the different sectors in super. Member investment choice is a big issue too.”

Slattery said SPAA believed the SSR idea would be welcomed by the financial planning community, because it will remove the uncertainty around what accountants can and cannot advise on.

She said it filled a gap in the licensing spectrum.

“I think this whole process will benefit both the financial planning community and the accounting community,” Slattery said. She said if the exemption were removed and accountants only had the option of becoming fully licensed, that’s what they would do, and that would have adverse consequences for the financial

“We’re trying to build up a professional financial planning community for SMSF advice, so it’s got structure, and so it’s got recognition and it’s got consumer benefit at its core.

“The restricted license is so that accountants and financial planners know the difference between the incidental tax advice and tax advice, and the difference between [fund structures] and can provide advice on that.”

D’Aloisio told the SPAA 2010 national conference in Melbourne that there were “conceptually, some issues to get over” before such a form of restricted license could be introduced.

“I understand where you’re going with this ‘half-way house’,” D’Aloisio said. But he added that offering a restricted license for superannuation could lead to other interest groups also seeking restricted licenses.

“I think you are going to be going into an area that, from a policy view, is difficult,” he said.

However, D’Aloisio also noted that ASIC does not set policy, it simply administers it.

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AFSR licensing
written by peterv, February 19, 2010

Please note that all AFSR licences have different restrictions on them. There is thus no such thing as a category of licence or a restricted licence. ASIC would never consent to such an arrangement.

As for accountants, the accounting bodies dropped the ball 30 years ago. What should be happening is that all public accountants obtain registration as tax agents, auditors and financial planners at the time that they obtain their practicing certificate.

Bert's comment that there should be GP's and specialists is correct. However when it comes to SMSF's this the province of the GP. A wort is removed by a GP not a skin specialist unless there is a serious complication.

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GPs and Specialists
written by Bert, February 19, 2010

The FSRA provides consumers (amongst other things) with the right that a Financial Adviser addresses their overall needs.

The client can request to limit the advice.

The danger with a limited Super licence albeit the wide range described in the article, is that the client may not be offered alternative strategies.

To pursue the line of “limited advice” thinking for SMSF’s or any other products or services surely is an erosion of the rights clients currently have under FSRA.

Surely, a better long term strategy is to follow the lead of other Professions for example the Medical fraternity.

The financial adviser would be the financial GP offering total advice, and prescribing the course of action.

The Specialist limited licence (SMSF and any other area deemed specialist) would be a source of referral from the financial GP. The specialist would offer their opinion in that area of expertise, and if in agreement would proceed.

I believe this would have a better outcome for all, and would welcome comment.

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Financial Adviser
written by J Catling, February 18, 2010

While the concept looks to have it's merits on the surface, I agree with D'Aloisio's concerns. The regulations for giving personal advice on superannuation should be EXACTLY the same for any profession giving that advice. Therefore, any 'restricted' licence would have to include the same 6 steps as a financial planner is required to do (including the SoA, reviews etc). The disadvantage then to the investor is that they would be receiving advice that is limited to one component of their overall situation, rather than a cohesive, comprehensive approach that also ALL of the issues (risk, diversification at all levels, estate planning etc). This is the level of service we prefer to work in, and believe it offers more value to the client. If a 'limited' service is going to be able to offered by Accountants, banks, industry funds or other, then that same 'limited' service should be made available to financial planners. Consumers are already confused by the issues regarding superannuation and the advice they may or may not be receiving, the value of that advice and the fees - don't add more layers of differentiation. If you want to 'seperate' superannuation from comprehensive advice, then have the same rules for everyone BUT be warned that will create more opportunities to sell a product, rather than provide a service.

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FP Partner
written by APWell, February 17, 2010

How can an accountant comment on other superannuation products but not be allowed to comment on the investments held in these supers, the insurance held in the supers and all the associated costs, admin, adviser, MER's, insurance premiums, etc. It just doesn't work that way.
That's why my accounting partners relinquished setting up SMSF for clients (4 years ago) as they realised the exemption was rubbish and left the client with a very poor result. The limited licence would also leave the client with a very poor result.
Who is SPAA trying to help the accountants whinging about not being able to give SMSF advice or looking after the clients??
Accountants will not all go and get AFSLicensed without the exemption or this would have already happenned - and it hasn't. Most accountants realise they cant do it all and thus most choose to be either an accountant or a financial adviser - god help those trying to be a jack of all and a master of nothing.
I would say this is SPAA's first really stupid idea after all the good work it has done.
SMSF Specialist Adviser APwell

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Its time to declare war
written by peterv, February 17, 2010

I am a Chartered Accountant. That means that I have an accountancy degree and that I have worked for another Chartered Accountant for a minimum of three years and that I have passed the strenuoue CA program currently comprising 5 modules.

I also hold an AFSR licence and am a registered company auditor.

SPAA and FPA are trying to muscle in on the territory traditionally occupied by accountants. However they are bodies that represent people who do not have the academic qualifications nor the perseverance to obtain the necessary experience to become REAL accountants. Their claim is that they represent a specialised group of practioners.

Reg146 specifies the minimum educational standards for a licenced advisor. However these standards have to be so low such that insurance companies,banks and super funds can get their tellers, secretaries and clerks registered.

If you want to be a real accountant then join the ICAA, CPA or NIA. Do not settle for second best.

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...
written by finplan, February 17, 2010

I do not see why accountants should be given special treatment. Special licences would just lead to further confusion and more accountants stretching the limits of the licence as they currently do with their special exemptions. To my black and white way of looking at things, you either subject the entire process to regulation, such as FSR, or you have no regulation at all.

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