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
