Accountants commonly provide advice and services to clients relating to self managed superannuation funds (SMSFs).
SMSFS ARE FINANCIAL PRODUCTS
An interest in a SMSF is a financial product. It is therefore important to understand the types of SMSF advice and services that require licensing under an Australian Financial Services (AFS) and what exemptions can be relied upon to provide unlicensed SMSF advice and services.
Superannuation – do I need to be licensed (PDF) provides on overview of what superannuation and SMSF advice and services require you to be licensed.
Importantly, the accountants’ exemption (Regulation 7.1.29A) was repealed on 1 July 2016. This means that an accountant, or any individual, cannot recommend the set up or wind up of an SMSF without being appropriately licensed under an AFS licence. Importantly, this includes advice that could reasonably be regarded as being, intended to influence a person in making a decision about an interest in a SMSF.
The provision of unlicensed financial product advice is potentially a breach of the law and could incur significant penalties, including fines up to $36,000 for an individual or up to two years imprisonment. Further, it will not be covered by Professional Indemnity Insurance and could risk professional membership.
EXEMPTIONS FOR CERTAIN SMSF SERVICES
While the accountants’ exemption was repealed, other exemptions continue to permit the provision of specific SMSF advice and services without being licensed under an AFS licence, such as Corporations Regulation 7.1.29.
However, before relying on any exemption it is important to be aware of how it operates including any specific obligations, such as the provision of a written disclaimer.
Financial advice and regulations: Guidance for the accounting profession (PDF) and our complimentary webinar provide detailed information for members on what advice and services can be provided without being licensed under an AFS licence.
Your options to PROVIDE SMSF ADVICE AND SERVICES
There are a range of options you can consider to ensure your clients have access to SMSF advice and services.
Become an authorised representative
As an authorised representative of another entity’s AFS licence, you can provide licensed SMSF advice and services to your clients. There are additional compliance obligations, however they differ from being responsible for running the AFS licence.
CPA Australia has published Considerations when selecting an Australian Financial Services (AFS) licensee (PDF) to provide guidance on the key factors you should consider and questions to ask to help you select the right AFS licensee.
It is important to be aware a new education, experience and ethical standards regime commences for all financial advisers from 1 January 2019, which will lift the education and experience requirements to become a financial adviser.
Hold your own limited or full AFS licence
Running your own AFS licence can provide a level of flexibility and independence than being licensed under another entity’s AFS licence. However, there are additional education and experience that you must meet to be eligible to apply for your own AFS licence. There are also a range of compliance, financial and resources obligations that an AFS licensee must commit to, in addition to the requirements to provide financial planning advice.
If you hold your own AFS licence, please provide a copy of your licence to CPA Australia at email@example.com
A key factor to a successful referral arrangement is to ensure you and the financial adviser share similar values and commit to making the arrangement work. This can include joint venture arrangements.
It is also important that you understand what SMSF advice and services you can provide to clients without being licensed.
If you have questions or would like to talk about your circumstances, email firstname.lastname@example.org to arrange a time for a specialist to call you.