Practices need to follow a three-stage process in preparing for compliance with the accountants licensing regime
While the accountants’ exemption in relation to SMSFs will formally be removed in June 2016, accountants can apply for their own license from June 2013. This license allows for advice in relation to SMSFs as well as broader class of product advice or strategic advice around other financial products, such as equities, managed funds and insurance.
In terms of class of product or strategic advice, this means accountants can advise clients, for example, on how much insurance they need, whether this needs to be held inside or outside the super fund, or different types of insurance. However, they are not able to talk about specific financial products.
Effectively the license accountants can apply for is an Australian Financial Services Licensee (AFSL), but it is limited in terms of scope of advice that can actually be provided. There are some concessions to a traditional license, including; recognition of organizational competence when holding a public certificate and no financial audit requirement when not holding client funds. The alternative to getting a license is to become an authorised representative of another licensee.
The implementation timeframe runs from July 2013 through to 2016, and this lengthy transition period has been given for a reason as there are a number of things accountants will need to do in order to comply with the new regime. We believe there is a three stage process that should be followed that allows accountants implement the changes while continuing to run their existing business.
Firstly, accountants need to get themselves ready; specifically this involves undertaking any necessary education. Secondly, they need to get their businesses ready. This means implementing the right advice process within their practices, including the training of the relevant staff. Finally, they need to start delivering financial advice to their clients, including providing recommendations in an appropriate Statement of Advice.
In my next blog, I will discuss the pros and cons of becoming the holder of a limited AFSL or authorised representative.
