If you Google “ASIC and SMSF” you’ll be greeted with a whole host of recent content directed at you, the SMSF Professional.
This year has seen a number of consultation papers and reports being issued by ASIC relating to SMSFs, some providing clarification on “professional advice” expectations.
These regulatory initiatives are a result of ASIC wanting to “support advisers in this SMSF area” by ensuring high quality advice. This has been established as one of their priorities to identify how they can assist SMSF advisers give better advice and how they can stamp out fraud and inappropriate conduct as a means of safeguarding the reputation of the SMSF sector.
At SPAA, being the peak association for SMSF professionals, we understand that our members are driven to operate their “advice” practices beyond the expectations set by the minimum compliance requirement, but it is a good reminder for the broader community that there is no time like the present to do a health check on your SMSF advice business.
Although financial planners and advisers will be familiar with ASIC’s involvement and the requirements that come with operating under a regulated regime, for accountants and other SMSF professionals this involvement may be their first introduction to operating under an area regulated by ASIC.
Putting aside the regulatory guides that have come as a result of the broader industry “Future of Financial Advice” reforms (Best Interest Duty, Conflicted Remuneration, Opt-In and Asset based fees on geared investments etc). The consultation papers, regulations and reports issued this year that have focussed in on SMSF advice practices include:
| ASIC Report: 337 | SMSFs: Improving the quality of advice given to investors |
| Regulatory Guide 243 | Registration of self-managed superannuation fund auditors Removal of the Accountant’s exemption |
| Consultation paper 212 | Licensing: Training of financial product advisers —Update to RG 146 |
| Consultation paper 215 | Assessment and approval of training courses for financial product advisers: Update to RG 146 |
| Consultation paper216 | Advice on self-managed superannuation funds: Specific disclosure requirements and SMSF costs |
Given RG243 is operational from 1July 2013 and CP212 and CP215 is a review of an existing regulatory guide (RG146), let’s take a look at the consultation paper that explores a new topic – SMSF advice disclosure, CP215: the specific disclosure requirements of SMSF practitioners (and SMSF costs).
The proposed requirement is to not only cover what disclosures need to be made but how they should be made.
Importantly, ASIC notes “as a matter of best practice…give the disclosures in person at the time the advice is provided…” The disclosures also significantly broaden the depth of information required upfront both from the client (for example, in respect of exit strategy) and external service providers (for example, disclosure of wind up costs).
As an SMSF Professional of the future, it’s critical to keep ahead of the compliance requirements and here’s some tips to get you started:
- Keep up to date with ASIC announcements at ASIC Publications
- Make submissions on important changes via your Professional Associations – for example, submissions@spaa.asn.au ( Note: Submissions on CP216 are due 11/11/13)
- Diarise when new requirements apply CP216 class order (due Feb 2014) will apply from August 2014
- Talk to your dealer group about what they are doing to help you ensure compliance with new ASIC requirements.
- Investigate how your software platform is being adjusted to cater for the proposed changes.
- Update your client fact find to cover off ASIC requirements, for example, exit strategies.
- Periodically check your advice templates meet ASIC requirements.
- Change your advice process to make sure specific disclosures are made in person.
- Review your external service provider relationships to ensure that they can clearly disclose all costs to you.
Lastly, check with your Professional Association, such as SPAA, about any training and resources they can provide to help you implement the changes; remember, they are there to help you as a professional SMSF advice provider.
Andrea is the Chief Executive Officer of the SMSF Professionals’ Association of Australia Limited (SPAA). She has worked in the financial services industry for over 21 years and has established herself as an authority in the field of SMSFs. Her passion for the industry and its self regulation is one of the reasons for SPAA’s inception and subsequent recognition as the peak professional body for the SMSF sector. She is the face and voice of the association.
