The Fold Legal says that accountants who stop offering advice on SMSFs with the removal of the accountants’ exemption on 30 June 2016 could be in breach of the Corporations Act.
Until 30 June 2016 accountants are able to provide advice on establishing an SMSF without the need for an AFSL. According to Investment Trends data in 2014, only 15 per cent of accountants that provide advice on SMSF are authorised to provide investment advice while only 13 per cent are RG146 compliant. Furthermore, a 2014 Accountants Daily survey found that less than 50 per cent of accountants have begun preparing for the end of the accountants’ exemption.
The Fold Legal’s senior lawyer, Jaime Lumsden Kelly believes that with less than a year left until the expiry, accountants need to have knowledge of what financial product advice is to understand how not to provide it otherwise they “could be at risk of a Corporations Act breach when they are no longer exempt.”
CPA Australia has continually expressed concern that those members who fail to act now, run the risk of losing the option of a limited license or miss out on transitional allowances that will help most accountants obtain the limited license when the exemption expires.
Lumsden Kelly’s Five Key Issues that Unlicensed or Unauthorised Accountants Need to Consider To Provide Financial Advice
Lumsden Kelly says the need for a solid referral relationship with an AFS licensee who can provide this advice will go a long way to demonstrate compliance and offered five key points for unlicensed / unauthorised accountants to keep in mind when talking with clients.
Lumsden Kelly believes that failing to consider these points could open the accountant up to a breach of the Corporations Act and “prevent you from providing advice without a licence.”
Five key points for accountants:
• Recognise and avoid dangerous client questions that tempt advice answers
• Understand how to change opinions into factual information that still provide value
• Identify which part of the accountant’s current SMSF services is not financial product advice e.g. advising on SMSF tax requirements
• Know when to refer clients on to a financial planner for advice
• Accountants should not be fooled into thinking they can establish SMSFs on an execution-only basis, without advising clients about the suitability of an SMSF.