The “vague and flowery” advice accountants are at risk of giving when the accountants' exemption expires will “inevitably” lead to client misunderstandings and litigation, an adviser has warned.
Bluepoint Consulting's director, Tony Bates, told SMSF Adviser that the biggest challenge with the accountants' exemption is that SMSF trustees expect to be able to talk sensibly about their SMSF with their accountant.
Unlicensed accountants, however, will be too frightened to give them advice.
“The advice clients receive will become even more cautious, flowery and vague than it has been under the accountants' exemption,” said Mr Bates.
“The clients aren’t going to get clear advice; they’re not going to get a clear understanding of what they should be doing. They’re going to get vague statements and that could lead to misunderstandings and the wrong decisions.”
Lack of clarity resulting from some of this “vague advice” may lead to negative outcomes for the client and “will inevitably lead to litigation further down track”, Mr Bates fears.
“In a year’s time, if insurance is arranged or pensions are commenced, and it’s under some vague conversation, then I think that puts the trustees in a very good position to litigate,” he said.
Mr Bates says he expects ASIC to commence shadow shopping after 30 June this year.
He also expects there to be significant industry consolidation.
“I think accountants who have done nothing are likely to sell off their SMSF book. I think it’s bound to happen because it’s too hard to do anything else,” he said.
The latest figures provided by ASIC to SMSF Adviser indicated 78 applications had been approved while 21 applications were under assessment.
There were 101 applications rejected and withdrawn.