What accountants who advise about SMSFs should know - Mills Oakley

This limited licence will allow accountants to provide a broader range of advice ... and class of financial product advice on specified prod- ucts. Any person can ...
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What accountants who advise about SMSFs should know Lauree Blair and Catherine Curtain MILLS OAKLEY LAWYERS Background Currently, an exemption in the Corporations Act 2001 (Cth) allows accountants to provide advice on the establishment, operation and structuring of selfmanaged superannuation funds (SMSFs), without the need for an Australian financial services (AFS) licence. That exemption will be removed from 1 July 2016, and accountants who wish to continue giving advice to their clients about SMSFs will need to obtain a new limited accountants’ licence.1 This limited licence will allow accountants to provide a broader range of advice than at present under the existing exemption, including advice on contributions and class of financial product advice on specified products. Any person can apply for a limited AFS licence (ie, not only “recognised accountants”) but, during the transition period from 1 July 2013–30 June 2016, recognised accountants can take advantage of different organisational competence arrangements that apply to them. This article outlines what accountants need to know about the limited AFS licence. It is a guide for accountants, as well as other professionals who collaborate with accountants, so that all parties are aware if an accountant is authorised to provide the advice.

What will the limited AFS licence cover? Applicants may select some or all of the following possible authorisations: • provide financial product advice to wholesale or retail clients on: — an interest in an SMSF; or — superannuation products in relation to a client’s existing holding to the extent required for: • making a recommendation to establish an SMSF; or • providing advice to a client on contributions or pensions under a superannuation product. • provide financial product advice to wholesale or retail clients that is “class of product” advice on: — superannuation products;

retirement & estate planning August 2013

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securities; general insurance; life risk insurance; basic deposit products; and simple managed investment schemes.

• arrange for a wholesale or retail client to deal in an interest in an SMSF. Providing “class of product” advice means a limited AFS licensee (Licensee) may give a recommendation about term deposit products, but must not make a specific recommendation that a person deposit their money into a term deposit product offered by a particular bank or building society. “Arranging to deal” includes assisting a client to apply for or acquire, issue, vary or dispose of an interest in an SMSF. These authorisations are an extension to the range of services that an accountant can legally provide at present. Under the current exemption, an accountant is not permitted to give “class of product” advice or advice about a client’s existing superannuation holdings.

How will the law and ASIC guidance apply to a limited AFS licensee? The conduct and disclosure obligations that apply when giving financial advice will apply to the limited AFS licence, including the recent reforms in relation to acting in the best interests of the client and related obligations. Guidance from the Australian Securities and Investments Commission (ASIC) is provided in Information Sheet 179, as well as numerous Regulatory Guides that apply to licensing generally and licence conditions specifically. Licensees will need to provide a client with a Financial Services Guide and Statement of Advice when giving personal advice to retail clients. However, one concession that has been afforded is that a Licensee is not required to lodge an audit report annually. If the Licensee does not handle client money, the Licensee will instead be able to lodge a “compliance certificate”, along with the profit and loss statement and balance sheet that is normally required.

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Applying for a limited AFS licence An applicant for a limited AFS licence will need to nominate at least one person to be a responsible manager to be directly responsible for signific