Accountants who have not already started the training they need to complete before they can apply for a limited Australian financial services licence (AFSL) now stand little chance of meeting a June 30 deadline to be licensed to continue providing advice on self-managed superannuation funds (SMSFs).
The Australian Securities and Investments Commission (ASIC) has set a soft deadline of March 1 for applications for limited AFSLs, to ensure applicants meet the June 30 deadline.
Kath Bowler, chief executive officer of Licensing for Accountants says the chance of meeting the March deadline has now passed.
“Forget about March,” Bowler says. “If you haven’t begun your training now, it will be very, very difficult.”
Just before Christmas, ASIC told Professional Planner that it had received 243 applications for limited AFSLs and had approved only 81. It said it takes about eight weeks to process an application, assuming all goes well – hence the March “deadline”.
Rush on training before submission
“Everyone is saying ‘Oh, ASIC has introduced a new date’, but it’s just common sense for us to say there is a timeframe we think it’s going to take us to get through any peak of applications, and the earlier we bring that peak on [the better],” said Warren Day, senior executive leader for ASIC’s assessment and intelligence group.
“I’ve got resources sitting here now that I have had to deploy other work to in licensing because they are not fully employed on those limited licence applications. They’re there and funded to do these things, but there’s just not enough work to keep them fully employed so I’ve got them doing other things. The reality is, I am happy to get more work for them now; I just need the applications to come in.
“It’s not about warning people that they’re going to miss out; it’s about drumming up business now so we can manage our own workflows.”
Bowler says the small number of applications isn’t her main concern.
“What bothers me is the number of calls I’m getting from accountants who haven’t even started their training,” she says.
“It’s from little [firms] all the way through to large and mid-tier firms. I’m now putting fast-track options into at least half a dozen mid-tier [firms], where they are just basically blocking three weeks out.
“I’ve had to change my approach – I wouldn’t normally recommend some of these training providers, but we’ve just got to get them across the line. It’s a matter of necessity now.”
Not all training providers are created equal, and although “they’re compliant courses” Bowler says it has reached a stage where “we’re just kind of doing what we can”.
“I reckon it’s not going to be long before the training providers can’t cope with the [demand],” she says.
“Certainly, anyone contacting me now, they’ve go no chance of meeting that March 1 deadline, because once they’ve done the training it’s still normally two to three weeks before the training provider can get the certificate that they will need to lodge with their application.”
Consequences of the onerous process
Bowler says many accountants have simply underestimated how onerous the application process can be. She says even those who have looked at what’s needed and have decided instead to become authorised representatives of existing licensees may be in for a shock.
“We’ve had a few get into the application form, get into what’s involved and them come back and say, OK, can you tell me what authorised representative options there are out there?” she 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.”
Bowler says she is “handling a lot of enquires”, and fielding “quite specific questions about the application form”.
“We’re running some sessions with the Chartered Accountants at the end of this month and the start of next month to fill out the application form – bring it along and we’ll help you fill it out,” she says.
“But we’ve had quite a few calls already, saying ‘I thought I had it under control but I don’t. Can you tell me what to do?’
“If they haven’t started their training, that’s going to be such a big issue.”
Training to comply with Regulatory Guide 105 (RG105) has to be completed before an application can be submitted to ASIC. It covers what’s necessary for the responsible manager of an AFSL. It is a separate training requirement from Regulatory Guide 146 (RG146), which is required for individuals providing financial advice.
“And it’s very confusing. There’s minimum training that’s required to get across the line for RG105 for your licence, and there’s a different standard of training in their capacity as an adviser, which is a higher standard – particularly given all the changes in education that are happening. They don’t even know about that one yet and I’m too scared to tell them, because they’re still so confused with the other two.
“But what it does mean is they’re potentially in a position to put their application in before they’ve completed all the training. They get the minimum needed for the application – which is RG105, in their capacity as a responsible manager – and then they top it up with what is needed in their capacity as an adviser.”
TOPICS: abolition of the accountants’ exemption, Australian Securities and Investments Commission (ASIC), Licensing for Accountants, limited AFSL