Do you need to be licensed?

On 1 July 2016 the accountants' exemption was repealed.

Recognised Accountants can no longer recommend the establishment or winding up of a self-managed superannuation fund unless they are appropriately licensed.

What has changed?

Regulation 7.1.29A of the Corporations Regulations 2001 previously permitted a Recognised Accountant to recommend a client to establish or wind up an interest in a SMSF without being licensed under the Australian Financial Services (AFS) licensing regime.

That accountants' exemption was repealed on 1 July 2016.

If you recommend a client establishes or winds up an SMSF without being appropriately licensed you will be in breach of the law and could be liable for significant penalties. This includes the provision of related advice, such as a recommendation to commence a pension or make additional superannuation contributions. You will also risk your professional membership and may not be covered by your Professional Indemnity Insurance (PII) policy.

The penalties for providing unlicensed financial product advice include up to two years' imprisonment or a fine of $36,000 for individuals or $180,000 for companies.

What are your options?

ASIC has warned accountants that from Friday 1 July 2016 they must hold a limited Australian Financial Services (AFS) licence or be an authorised representative of an AFS licensee to provide financial product advice on self-managed superannuation funds (SMSFs).

Your options include:

  1. Become licensed - apply for and obtain your own limited (or full) AFS licence, noting you will need to meet the experience requirements.
  2. Become authorised - become an authorised representative of another entity's AFS licence.
  3. Refer clients - refer clients who require financial product advice to an appropriately licensed entity or individual (this can include joint venture arrangements).

Member resources

There are a range of resources to support you address this change.

If you wish to become an authorised representative:

If you do not wish to provide financial product advice and will refer your clients:

Limited AFS licence applications - lodged but not yet approved by ASIC

If you lodged your limited AFS licence application with ASIC by close of business Thursday 30 June 2016, met all of the relevant requirements including the submission of all core proofs and supporting documents with your electronically lodged application, ASIC will continue to assess your application under the transitional streamlining provisions.

If you lodged your application by 30 June 2016 and have not yet been granted your final limited AFS licence, not draft, you cannot provide SMSF-related financial advice and dealing services until you have received your final limited AFS licence.

On 25 August 2015, ASIC issued a media release warning accountants wishing to apply for a limited AFS licence that failure to lodge applications in line with ASIC's requirements by 1 March 2016 would result in a significant risk that their application would not be assessed and approved by Thursday 30 June.

If you lodged your application after 1 March 2016 you should have received a letter from ASIC, which advises you must be prepared for the contingency that your application may not be assessed and approved by ASIC by Thursday 30 June 2016.

If you have any questions regarding the application process, what you can and cannot discuss with clients, or any other financial planning / SMSF enquiry, please email finplan@cpaaustralia.com.au

Limited AFS licence applications - lodged and approved

We are in the process of developing additional resources for members that hold a limited AFS licence. If ASIC has approved your limited AFS licence and you have not notified us, please send an email to finplan@cpaaustralia.com.au with a copy of your final licence.

In the interim, we take this opportunity to provide some timely reminders about compliance with your licence obligations:

Protecting the reputation of the CPA designation is a shared responsibility. Please ensure you have the right solution in place for your practice.