With less than two years to go until the accountants’ exemption is removed, only a very small number of accountants have applied for a limited licence. While this may demonstrate in-action by accountants, it might also indicate that accountants continue to be confused about what is involved in moving to the licensed regime and how to select a solution that is the right option for their business.
In a recent speech by ASIC at the CPA’s SMSF Conference, the regulator provided an update on the number and status of limited licensing applications that they have received.
Limited licence applications received by ASIC as at 27 May 2014
Source: ASIC speech: The regulator’s perspective on the regulation of SMSF’s, CPA SMSF Conference, 16 July 2014, page 4.
While there is an expectation within the industry that around 10,000 accountants will need to become licensed (or authorised), it seems many accountants are still weighing up their options. The longer this continues, the greater the challenge for the industry as accountants attempt to enter the regime during a very condensed timeframe.
As of 27 May 2014, ASIC had only received 62 applications for a limited licence. In many respects, this low number is not surprising given the time and effort involved and there being little incentive for accountants to move into the licensed regime early.
However, another telling statistic is the number of applications that have either been withdrawn by the applicant or ASIC have returned to the applicant due to deficiencies in the supporting documentation and information. Of the 62 applications, 25 sit within this category. This would seem to indicate that many accountants have underestimated what is expected in the application process, and more importantly, what is required and involved in maintaining a licence.
In ASIC’s speech, they indicated that the concerns with current applications often involved lack of evidence or understanding of the training requirements, inadequate professional indemnity insurance and insufficent understanding of the restricted scope of advice allowed under the limited licence.
The lack of incentive to move to the licensed regime early and the issues identified by ASIC as a result of the licensing application process are challenges that are not unique to the limited licence. These challenges are faced by the industry at large and apply equally to those accountants that are seeking to become an authorised representative of an existing licensee.
Those of us already familiar with and operating within the licensed regime have an important role to play in helping accountants understand the requirements and providing a clear path to move into the licensed regime. Furthermore, we have a role to play in helping accountants navigate this path and understand the opportunity and limitations of each solution.
For many accountants these statistics might prove to be the catalyst for action. They may drive accountants to make a decision about whether the limited licensing option is really appropriate for their business model, or whether an authorisation option that allows them to spend more time with their clients and less time on meeting licensing obligations, is the optimal solution.
David Lane is the chief executive of Count Financial Limited.
