Accountants wishing to advise on self-managed super funds (SMSFs) after the removal of the accountants’ exemption have been granted a generous transition period, according to the Financial Planning Association (FPA), which has also questioned the decision to restrict that licence to members of the joint accounting bodies.
From July 1 this year until 1 July 2016, accounting groups can continue to recommend the commencement or closure of self-managed super funds (SMSFs).
If they apply for the limited accountants’ licence – which allows them to continue to advise on SMSF commencements and wind-ups, as well as provide class of product advice – any time within that three-year window, they have three years in which they are exempt from several requirements that are normally part of the full Australian Financial Services Licence (AFSL) application process.
The FPA’s general manager of policy and standards, Dante De Gori, told InvestorDaily the transition arrangements are “very generous”.
“You’ve got three years to apply for the licence, then a subsequent three years to demonstrate you’ve met the licensing conditions – that is a very generous transition period for accountants,” he said.
“During that three-year period … there are certain experience requirements a licence holder needs to demonstrate that you won’t have to demonstrate because you’re deemed to have had those experience requirements on the basis of your public practice certificate as a member of one of the three accounting bodies,” he said.
“We need to be mindful that over the next three years, [and] we don’t believe there will be, but you don’t want [accounting groups] to see that as a three year window to exploit the rules until that exemption ends,” he said.
“We think accountants still have a duty of care to do the right thing whether they’re being regulated or not,” he said.
There is also a requirement in the legislation that firms “who receive an AFSL under this streamlined process must within three years of being granted the licence, if requested in writing by ASIC, demonstrate to ASIC they have the requisite knowledge and the competence to provide the financial services covered by their licence.”
Mr De Gori questioned tying the legislation to ASIC in that way. “The question you’ve got to ask is what if ASIC doesn’t ask, does that mean you don’t have to apply?” he said.
Mr De Gori also questioned the decision to limit the licence to accountants who are members of one of the three joint accounting bodies – the Institute of Chartered Accountants in Australia, the Institute of Public Accountants, and CPA Australia.
“In terms of free market type of approach by Treasury or government, it seems to be very restrictive. Why can’t another individual who is an accountant of another accounting body or another association be eligible for this concession,” Mr De Gori asked.