Accountants who currently give advice on setting up or winding up self-managed super funds (SMSFs) have been urged by both the SMSF Association and the Australian Securities and Investments Commission (ASIC) to get moving on an appropriate Australian financial services licence (AFSL) solution before time runs out.
ASIC has reminded accountants who do not already have an AFSL, or who do not intend to become an authorised representative of an AFS licensee, to “start applying for a limited AFS licence now, if they want to keep giving SMSF advice after 30 June 2016”.
“To date, ASIC has received only 160 applications for the limited AFS licence and granted only 70 licences – despite the application process being open for the past two years,” it said.
In a statement released last week, SMSFA said that under the current system, “accountants have an exemption under FOFA allowing them to give advice on setting up or winding up an SMSF”.
“This exemption ends on 30 June 2016,” it said.
“The SMSF Association has been working on this issue with Licensing for Accountants (L4A), an independent firm dedicated to guiding accountants through the licensing maze.”
L4A offers a range of tools, including a “licensing diagnostic” to help accountants arrive at the best decision. And in a series of articles on licensing options for accountants, written exclusively for Professional Planner, the chief executive of (L4A), Kath Bowler (pictured), sets out the key issues accountants needs to consider, and describes the steps they need to take to determine an appropriate licensing solution.
To be or not to be
Bowler says accountants should not necessarily be agonising over whether or not to get one of the new limited licences. She says the first decision accountants need to make is whether or not to be licensed at all.
“Most accountants know there is a July 2016 deadline looming, but don’t really understand what that means, and what they have to do now,” Bowler writes.
The series of articles debunks licensing myths “to help accountants understand the right licensing journey for them”.
“And it is a journey,” Bowler says.
“Keep in mind there are various options available – the key is finding a good fit for you, your business and your clients.”
In the second part of the series, Bowler outlines a three-step process for deciding which strategy – if any – is best for you, your business and your clients.
“All too often I see the following list of options presented to accountants who are deciding what to do about licensing: do nothing; refer; obtain a full Australian financial services licence (AFSL); obtain a limited AFSL; or become an authorised representative.
“Erase this from your minds now and, instead, follow my simple three-step process to determine your options,” she says.
In the third part Bowler outlines – and clarifies – the three biggest obstacles to beginning the licensing journey.
“I estimate that only a few hundred accountants have become licensed or authorized,” she says.
“Quite frankly, I’m astounded at how few accountants have begun their licensing journey.
“The opportunity for accountants to embrace licensing and use it to realign their businesses from compliance to advice is enormous; but I’m very concerned that accountants may continue to stick their heads in the sand and ultimately fail to grasp the opportunity.”
Range of costs
In Part Four, to be published in the September edition of Professional Planner, Bowler says figures being bandied around as the “real costs of licensing” range from “pitifully low to outrageously high, so let’s set the record straight”.
Although the costs of licensing shouldn’t be the driving factor in your decision on licensing, it is important that you have unbiased and credible information to consider your options,” she says.
“When examining costs, it’s important to break it down between initial and ongoing costs.”
Bowler provides a breakdown of indicative costs for different licensing options, and the standards of service and support accountants should expect to receive for the money.
Professional Planner will publish Bowler’s ongoing series on licensing options in the run-up to the July 1, 2016, deadline.
