Australian accountants are highly unlikely to take up the financial services license as it is currently proposed, according to specialists Accountable Financial Solutions.
Accountable director David Moss said the restrictions imposed on the Accountants Australian Financial Services Licence (AFSL) will hamper accountants’ ability to service their clients and it will be costly and complex to administer.
“We do not believe that many accountants will go down the path of applying for their own licence,” Moss said.
As part of the government’s Future of Financial Advice (FoFA) reforms, a new limited AFSL was drafted and introduced last month.
This replaces the current accountant’s exemption on SMSF advice with Minister for Financial Services and Superannuation, Bill Shorten, upbeat on up to 10,000 accountants becoming licensed under the new regulation.
Accountants can consider applying for the “streamlined” AFSL option for from July 1 2013.
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However, Moss argues that, for most accountants, joining an existing AFSL would be the simpler and more cost-effective option.
“By their own estimates, the government has stated that the initial and ongoing costs of operating an “Accountant’s AFSL” to be between $10,000 and $20,000 per year,” he said.
“Also, the majority of accountants have never been licenced previously and have little experience and knowledge of how a financial services licence works on a day to day basis.”
The proposed Accountants AFSL would also likely prove too restrictive for accountants looking to provide their clients with an adequate level of service.
Moss believes it will allow accountants to provide “financial product advice” on SMSFs, however he claims it does not specifically address what areas of SMSFs accountants could advise on; for example, areas such as contributions, rollovers, borrowing arrangements, lump sums and pensions.
Managing expectation
The new regulation will also allow accountants to provide “financial product advice on superannuation” already held by a client but only in consideration of a client establishing a SMSF, making contributions or starting a pension.
There is no indication in the current proposal as to whether this covers other areas such as roll-overs.
“Our view is that the draft regulations and the new Accountants AFSL fail to provide accountants with a way to effectively meet the demands of their clients,” Moss said.
“Accountants want to be able to advise their clients on all matters associated with SMSFs, including setups, contributions, roll-overs/super consolidation, borrowing arrangements, lump sums and pensions. And, clients expect their accountants to provide this advice.”
Bill Shorten’s announcement clearly stated that the accountants using the limited AFSL are required to meet all th eobligations of the corporations Act including the new FOFA best interest duty.
It is simple really, the current discussion is all about making accountants feel good while they were sold up the creek. The best thing is as I see it Financial Planners and Accountants will be playing on a level palying field soon.
So if accountants want to do all the advice components as an existing financial adviser then get fully licensed, actually do the required AFSL compliance such as full fact finds, super comparisons, insurance comparisons, investment comparisons, write SoA’s, full written fee disclosure including the admin cost of having SMSFaccounts done each year, etc. Plus actually do all the upfront and ongoing education (which should require a degree to be an adviser)
This is exactly what advisers have to do so why should accountants be able to do a half baked, half or zero compliance job when it is the exact same work?
Where is the level playing field? Wake up Silly Billy shorten, you can’t have the exact same work done but let accountants do less than half the compliance, if they do it at all. We all know they provide much SMSF AFSL advice already with nil compliance. And not 1 single accountant has ever, ever been pulled up for this.