Accountants and other advisers who expect to operate under the new limited Australian Financial Services Licence (AFSL) should already be reviewing their service offerings to clients and researching what is being offered by the various AFSL providers.
This is the view of Hugh Elvy, head of financial advisory services at The Institute of Chartered Accountants in Australia. He believes much can be done in preparation for the new regulation, despite accountants awaiting government guidance and the regulator’s review of the licensing process.
A limited AFSL will eventually replace the “Accountants’ Exemption” that presently excludes accountants from requiring an AFSL for the provision of certain financial services to self-managed superannuation funds (SMSFs).
Under this new form of licence, accountants will be able to advise their clients, not just on the set-up and structure of SMSFs, but also on the manner in which the funds are invested.
Up to 10,000 accountants are expected to make use of the licence with the Institute already having received over 1000 expressions of interest from members interested in its SMSF program.
One of the fastest growing sectors
In his presentation to The Institute of Chartered Accountants in Australia’s National SMSF Conference, held in Sydney last week, Elvy said accountants should start to consider options and opportunities while awaiting draft regulations from Treasury and further guidance from the Australian Securities and Investments Commission (ASIC).
A transition period of July 1, 2013 to July 1, 2016 has been allocated for the application process, but this is also subject to regulator review.
In his address to the conference, parliamentary secretary to the treasurer, Bernie Ripoll, argued that despite the amount of regulatory reforms in the SMSF space, the sector is functioning well.
“When I look at SMSFs, I see one of the fastest growing sectors with one third of the total superannuation savings in the country, and about 500,000 trustees,” he said.
“We’ve had more reform compressed in the last few years than we’ve had in the last 30. We’re in a position now for that reform to bed in and be implemented… the SMSF sector works, it’s not broken. But that doesn’t mean there can’t be improvements or efficiencies, more that can be done.”
Ripoll commended the Institute of Chartered Accountants Australia for developing an SMSF program for its members.
“I understand that the program, which began only this year, has been very popular, with about 180 members completing the course, and a further 80 currently enrolled,” he said.
“The fact the Institute has received over 1000 expressions of interest from members who want to attain this specialist status indicates that this is a very worthwhile initiative.”
Increasing engagement
Institute head of superannuation, Liz Westover, said the growing popularity of SMSFs is indicative of Australians’ increasing engagement with their superannuation savings.
“In a sector so big, industry consultation is critical to ensure the regulatory reforms reflect the needs and requirements of SMSF trustees. SMSFs have a critical role to play in enabling Australians to save for their retirement, and it’s great to see the government is so committed to ensuring the regulatory settings reflect that,” she said.
According to Australian Tax Office assistant commissioner, Stuart Forsyth, there are currently over 478,000 SMSFs, holding almost $438 billion in assets, and recent statistics released by the ATO indicate that number continues to grow.
“This is not a backyard industry, it’s huge. Within the next two years it’s likely that 1 million Australians will have an SMSF,” he said.
