Accountants have been warned to go into any arrangements with Australian financial services (AFS) licensees with their eyes open to avoid potential problems with future succession or business sale plans.
The caution comes as the SMSF Association again reminded accountants that time is fast running out for any who still need to find a solution to continue to provide advice on self-managed super funds (SMSFs) after the so-called accountants’ exemption ends on June 30.
In a statement yesterday, the SMSF Association’s head of education, Liz Ward, said ASIC has repeatedly warned that March 31 is “the effective cut-off date for those accountants who want either a limited or full licence”.
“Across the industry there is concern and, to some degree, bewilderment about what the thousands of accountants who now advise SMSFs are going to do after 30 June,” Ward said.
“The reality is that if they are not operating under an AFS licence – full or limited – or have not established a referral arrangement or joint venture with a party that has an appropriate AFS licence, they effectively will only be able to provide tax advice to their SMSF clients.”
Read the fine print
Paul Tynan, chief executive officer of Connect Financial Service Brokers, says it is unlikely that all accountants currently giving advice on SMSFs will seek to be licensed by the June 30 cut-off, and those who opt to become authorised representatives of AFS licensees instead should read the fine print of any agreement carefully.
“If you don’t know who you’re talking to, you’re going to get caught,” Tynan says.
“Go and have a look at the agreements. I’ve sat in front of accountants and said, look at your agreement: you own the revenue but you don’t own the client. It says that in the agreement.
“So when they want to merge with a firm down the road, or a firm comes and knocks on their door, they can’t merge because they’re attached to [a licensee] and they don’t own the client any more.
“That cuts off another avenue [of succession planning], because they haven’t done their homework. I see these things all the time.
“They have got to do their homework. I would never go to [some licensees] who advertise in this space all the time. Do your homework: they’re getting too big, and they do not service [their representatives] properly.
“The accounting principal must do due diligence, and must look at the licensee, and who owns the licence. Have a look at the documentation to see who owns the client in the agreement they’re getting you to sign.
A spanner in the works
“That could really throw a spanner works when you’re trying to sell your accounting business, and it [could] devalue your accounting business.”
The chief executive of Licensing For Accountants, Kath Bowler, says many accounting firms have already left it too late to have an appropriate solution in place by the June 30 deadline.
Bowler says it is highly unlikely that an accountant will meet the ASIC deadline if they have not already started the training they need to complete before they can lodge an application for a licence.
And those who are opting to become an authorised representative of an AFS licensee may find their choice of licensee severely limited as the deadline gets closer.
“My concern is the lack of choice,” Bowler says.
“There’s going to be lots [of accountants] that either don’t want to become licensed in their own right, or have decided that it’s too hard and it’s not right for them.
“But because they have left it too late, the licensees that are offering accountant authorities – the good ones – can cherry-pick. That’s probably a greater concern. [Accountants will] be left with some pretty average choices.”
