A migration towards adoption of a full Australian Financial Services Licence (AFSL) appears likely, rather than to the limited licence being introduced to replace the accountants’ self-managed super fund (SMSF) licence exemption.
That is the opinion of the SMSF Professionals’ Association of Australia (SPAA) chief executive Andrea Slattery, who told delegates at the annual SPAA conference on Friday that there has already been a steady inflow of SPAA members into the full licensing regime over the past seven or eight years.
“We expect quite an intake into the limited licence, but we would question whether that’s enough,” Ms Slattery said. “We believe there will be a migration towards the full licence.”
The industry needs to work with the regulators to examine cost efficiency within the new licensing regime. We need a cost-efficient and level playing field across [the advice sector] so the full licence is cost-efficient as well, she added.
There should also be an early take-up of the limited licence from those who want to get ahead of the market. There will always be some late adopters who may be hoping for a late change that would mean easier compliance requirements, but they are likely to be those less interested in strategic advice, she said.
The minimum qualification remains RG146 although the regulator is currently working towards increasing the standard. Ms Slattery pointed to SPAA’s SSAud specialist auditor qualification as an additional requirement for SMSF practitioners.
Dealerships not only have to confirm that practitioners have met the minimum requirements, but that their authorised representatives have met additional competencies so that the licensee is comfortable for them to provide advice, she said.
Ms Slattery said the issues concerning limited licensing are something that all groups will have to address because they can’t expect to just have the minimum RG146 qualifications but not expect the regulators to look at them more closely.
There is also a gap in professional indemnity insurance coverage between the two areas that needs to be addressed. Accountants moving into SMSF advice will need additional cover because they won’t be covered under accountant PI cover, Ms Slattery said.
“That prudential law is a great big hole – you can’t get PI under accounting cover, but financial planning cover normally has an end to it and doesn’t move into prudential law,” she said.
