The federal government has announced the long-awaited licensing regime for accountants servicing self-managed superannuation fund (SMSF) clients that will replace the accountants' exemption introduced under the Financial Services Reforms in 2002.
Under the new rules, accountants seeking to provide financial advice to SMSFs will need to hold a limited Australian financial services licence (AFSL). The new licence will now allow these accountants to provide advice on SMSFs as well as "class of product advice" on items such as simple managed investment schemes, general and life insurance, securities, and basic deposit products.
However, the limited AFSL will not allow accountants to offer advice where specific product recommendations are made.
"This new licence will extend the consumer protection provisions of the Corporations Act, such as the best interests duty in the recently passed Future of Financial Advice reforms, to financial advice provided by accountants," Minister for Financial Services and Superannuation Bill Shorten said in a statement.
"This replacement to the current accountants' licensing exemption is a major step forward and will help to facilitate a significant expansion in the provision of financial advice to Australians.
"The new regime will be transitioned into operation between 1 July 2013 and 1 July 2016. In addition the back half of this year will see a public consultation process on the draft regulations.
The Self-Managed Super Fund Professionals' Association of Australia (SPAA) supported the announcement but emphasised the need to establish a level playing field between accountants and financial planners as well as a great focus on competency standards.
However the association felt the announcement was an acknowledgement of its work in this area.
"As SPAA enters its 10-year anniversary, it's fitting that we have achieve such recognition alongside the major accounting bodies," SPAA chief executive Andrea Slattery said.
"SPAA was the first organisation to promote and recognise specialist SMSF competencies and the statements made yesterday by the Minister are a strong indication that SPAA's specialist advisor designation 'is in the mix' and will be appropriately recognised in the new licensing regime."
The initiative was also backed by the Institute of Public Accountants (IPA).
"Minister Shorten has listened to the accounting profession and has also addressed the needs of ordinary Australians who want low cost financial advice," IPA chief executive Andrew Conway said.
"These reforms will ensure that the trusted adviser to Australians, their public accountant, is able to assist them in making sense of today's complex financial environment."
In addition to the new licensing arrangement the government also provided more detail in relation to SMSF auditor registration.
To be registered as an SMSF auditor with ASIC, practitioners will need to hold a tertiary qualification that includes an audit component or completed professional accounting body program where audit was studied.
Practitioners also need to hold professional indemnity insurance, meet a fit and proper test, have gained 300 hours of SMSF audit experience in the three years prior to registration, and successfully sit a competency exam.
The hours based experience requirement will not be needed for existing SMSF auditors who have authorised an SMSF audit in the past year.
Similarly, SMSF auditors who sign off on 20 or more in the 12 months prior to their registration application will not be required to sit the competency exam.
Once registered SMSF auditors will have to complete a minimum amount of continued professional development training every three years, and will have to comply with the Accounting Professional and Ethical Standards Board's APES 110 - Code of Ethics for Professional Accountants.
Opposition assistant treasury spokesman Mathias Cormann is critical of the timing of the government's announcement.
"As always with announcements from this government the devil will be in the detail and the coalition will consult widely with all stakeholders when Labor eventually releases the regulations giving effect to the changes announced today," Cormann said in a statement.
"In particular, the coalition will carefully examine the regulations to ensure that the new licensing requirements would not impose unnecessary additional red tape and costs for small business professional accountants and their clients."
