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On 1 July 2016 the accountants' exemption was repealed.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That accountants' exemption was repealed on 1 July 2016.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:
- Become licensed - apply for and obtain your own limited (or full) AFS licence, noting you will need to meet the experience requirements.
- Become authorised - become an authorised representative of another entity's AFS licence.
- Refer clients - refer clients who require financial product advice to an appropriately licensed entity or individual (this can include joint venture arrangements).
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:
Update on ASIC’s assessment of applications
ASIC prioritised applications lodged before 1 March 2016. Those applications have now all been processed, assessed and granted (where appropriate). While ASIC dedicated more resources to process as many applications as possible by 30 June 2016, there remain a number of applications that were not finalised by 30 June 2016.
Over 70 per cent of the total applications lodged with ASIC came in over the last 6 weeks of the transition period. These applications will take longer than usual to process and assess due to the transitional funding ASIC received to process applications ending on 30 June 2016. The quality of the applications received in those final weeks was also generally not of the same standard as those received prior to March 2016.
ASIC will continue to work with applicants to process applications during coming months but applicants have been advised to expect delays.
What this means for those applicants awaiting the assessment of the applications lodged
If your application for a limited AFS licence has been accepted for lodgement, it is currently under assessment for determination of whether a licence will be granted. The acceptance of the application lodgement does not guarantee approval of your application.
Therefore, while you await your application outcome, you must not provide any advice in relation to the acquisition or disposal of an interest in a Self-Managed Superannuation Fund (or provide any other financial services) unless you have been appointed as an authorised representative of an appropriately licensed AFS licence holder.
Need further guidance?
CPA Australia has a range of resources to support members. If, after reviewing our resources, you have further questions and would like to talk about your personal circumstances, please email email@example.com to arrange a time for a specialist to call you.
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 firstname.lastname@example.org 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.