Serious concerns follow latest licensing figures update

Written by Miranda Brownlee Monday, 01 February 2016

Concerns are mounting in light of updated figures from ASIC which indicate the number of accountants that have obtained a licence remains limited.

The latest figures issued to SMSF Adviser by the regulator indicate ASIC has received 276 applications for limited licences as of 28 January 2016 and approved 88 limited AFSLs.

The number of limited licence applications submitted to ASIC has increased by 72, up from 204 as reported by SMSF Adviser last year, while the number of approved applications has risen by 10.

SMSF Association head of education Liz Ward said accountants have repeatedly been warned by ASIC that 31 March is the effective cut-off date for those accountants who want limited licences.

“After this date, the regulator is giving no guarantees that there will be sufficient time for accountants to meet the necessary requirements involved in getting an AFS licence,” said Ms Ward.

“Across the industry there is concern and, to some degree, bewilderment about what the thousands of accountants who now advise SMSFs are going to do after 30 June.”

If accountants are not operating under an AFS licence, whether full or limited, or have not established a referral arrangement or joint venture with a party that has an appropriate AFSL, Ms Ward said, they will effectively only be able to provide tax advice to their SMSF clients.

She also warned accountants who are expecting the deadline to be extended that they will be “sorely disappointed”.

“If you haven’t got your plans well underway by now, you have a problem,” she said.

Read more: 

Technology tipped to disaggregate SMSF admin services

Treasury estimates still ‘too limited’

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-1 #17 Jimmy Neutron 2016-02-09 09:16
Well good financial planners know that the markets are outside of their control, Ralph, and don't sell their services on the basis of performance. Do you sell your services on the basis of the size of the tax refund you achieve?
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-1 #16 Ralph 2016-02-08 14:38
Quoting Jimmy Neutron:
Unlike accountants Ralph who never recommend clients set up an SMSF because it gets them the initial and ongoing gravy train of 'hand holding' accounting fees that goes with SMSFs


I suspect the "hand holding" fees of accountants pale in comparison to the ongoing fees of most financial planners, regardless of performance.
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-1 #15 Jimmy Neutron 2016-02-08 09:18
Unlike accountants Ralph who never recommend clients set up an SMSF because it gets them the initial and ongoing gravy train of 'hand holding' accounting fees that goes with SMSFs
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0 #14 James 2016-02-08 08:17
GeorgeVC, with regards to all those highly educated SMSF Trustees with no need for financial advice, here are just 2 examples I've seen:

(i) Aged 67, retiring, had 95% his SMSF money in Australian shares, and understood little with regards to the tools of diversification.

(ii) Aged 66, retired, wife working, chose to leverage against his home, make a contribution into his SMSF to buy into bank shares, and employed a buy/sell strategy whenever stocks rose or fell 10%. (this is pre-2015)

Neither of these SMSF Trustees felt the need for financial advice. But hey, clearly they were sophisticated enough to ask to open an SMSF with their accountant.

Best interests indeed.
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+3 #13 David 2016-02-06 09:49
Sounds like most people have had a gut-full of over regulation!
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+1 #12 Ralph 2016-02-02 12:43
@ Lion - a SMSF is not viewed by most Accountants as a "tax box" but an investment holding structure with unique rules and taxation.
A SMSF is also not viewed as a tax box by most financial planners but rather as a trough to dip their snouts in.

Hell hath no fury like a vested interest masquerading as a moral cause.
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+4 #11 Law 2016-02-01 17:00
Quoting Lion:
Accountants correct me if I am wrong, but I would see a SMSF as a Tax Box!, not a Super product. It is the Entity in which the investments are held. My understanding is that there are tax boxes that dictate what tax rates are paid. An individual, a Partnership, a Company, a Trust Discretionary,Unit, Testamentary, SMSF. All these entities can hold investments, in the 4 main categories, Cash, Fixed Interest, Property and Shares.


Dear Mr Lion, forget asking your accounting buddies, check out the law. Whilst I agree with your tax boxes analysis, the fact remains that an SMSF is a super product under the law. So unless you can get that law changed, your analysis doesn't offer much help for you or your clients.
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-1 #10 Lion 2016-02-01 16:36
Accountants correct me if I am wrong, but I would see a SMSF as a Tax Box!, not a Super product. It is the Entity in which the investments are held. My understanding is that there are tax boxes that dictate what tax rates are paid. An individual, a Partnership, a Company, a Trust Discretionary,U nit, Testamentary, SMSF. All these entities can hold investments, in the 4 main categories, Cash, Fixed Interest, Property and Shares.
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+4 #9 eSMSFadvice.com.au 2016-02-01 15:23
GeorgeVC, What you say of some SMSF trustees you are correct, but not for all. I have met super trustees who can't tell me if they are individual or corporate trustees, others that should have started a TRIS years ago. What about an SMSF trustee authored investment strategy? I have not seen one yet in 15 years!

Arguing that you only provided factual advice is fine until it isn't. It is possible to play around the edges of the advice by sticking to the facts. However as soon as something goes wrong the client complains, ASIC can audit you and you have a very high number of client only directed results, you may have more of a problem then you realise.

Personally I think the the current legislation is not well thought through at all by the government but the real risk is being "deemed to have provided unlicenced advice".

How do you prove you didn't?
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+1 #8 GeorgeVC 2016-02-01 13:24
Quoting eSMSFadvice.com.au:
Bryan, when your client needs an investment strategy or you think they should start a pension what will you do?


Like most FP's, you patronise SMSF trustees as if they are a baby playing with a gun. Did it ever occur to you that ASICs designed one size fits all approach to treat all clients as financially illiterate, is just a system designed so that FPs dont miss things.

Most who choose an SMSFs get there because they have built up an understanding of share markets, the need for life insurance and estate planning, and are quite financially literate and intelligent enough to understand super tac concessions available and make decisions accordingly.Tha t is not a typical FP market. Your services and expensive "looking-after" retainers are seldom required by SMSF trustees.

Maybe you should target industry fund members, but then again they offer FP in-house now and dont like you anyway because of those escaltors!
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+6 #7 Wayne 2016-02-01 12:01
Maybe here is why
Maybe it is bad legislation
Maybe consumers will be worse off because of it
Maybe licensing does not equal good advice
Maybe accountants will be damned if they do and damned if they don't
Maybe we should have less regulation that panders to vested interest groups
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0 #6 eSMSFadvice.com.au 2016-02-01 11:43
Bryan, when your client needs an investment strategy or you think they should start a pension what will you do? From 1st of July, 2016 you won't be able say anything in this regard.
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+1 #5 GeorgeVC 2016-02-01 11:16
It amazes me that these vested FP industry interests continue to feign astonishment that accountants are not interested in licensing.

Post 1 July 2016, an accountant without a licence can still provide:
1. Factual advice on SIS compliance
2. Taxation advice, including contribution caps & pension limits & tax on pension funds
3. Traditional SMSF accounting services, financial statements, auditing
4. Execution only services such as deed instructions to lawyers or minutes resolutions etc implementing the SMSF trustee's own instructions e.g. to establish a pension.

That is what accountants have always done and that is what SMSF trustees want. Obviously accountants have done a great job so far as the Cooper Review in 2010 found that the SMSF sector is well run.

If ASIC wants to take on the entire accounting profession over what is "factual advice" & "execution only" services, the Government will be forced into a much needed re-think.
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+2 #4 Adam P 2016-02-01 10:59
Quoting Bryan:
We are accountants and we only provide tax advice as we see no reason why we should opt in into the ASIC limited licence !!! We dont sell super product nor we provide advice in buying any super product!!!

Bryan, you may be a little surprised but an SMSF is a super product, so setting one up is "selling a super product". And so is setting up an SMSF pension, it's all selling a super product Bryan. But hey let's try to pretend it's not !!! Sorry Bryan that game is over !!!
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-2 #3 Bryan 2016-02-01 10:35
We are accountants and we only provide tax advice as we see no reason why we should opt in into the ASIC limited licence !!! We dont sell super product nor we provide advice in buying any super product!!!
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+1 #2 Adam P 2016-02-01 09:49
Hello, accountants shouldn't have been giving all the AFSL required advice that they were giving with zero AFSL compliance.
Now they are being asked to play on the same AFSL compliance field as financial advisers they realise it's an absolute bucket load of work. And far from a free gravy train.
And guess what they are actually too busy being accountants and doing a good job at that rather than try to do another full time financial advice job too.
So accountants will generally choose to stick to doing accountant work, SMSF accounts / admin etc as they should have been.
And for those either super smart enough (or stupid enough) to do 2 full time jobs, I say good luck to you :-)
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+1 #1 Ralph 2016-02-01 09:31
Not that surprising really. Most smaller accounting firms are not going to fork out many thousands of dollars to do what they were doing anyway. They will just frame their advice differently.
From stories I've heard from medium sized firms, most will appoint one person as the financial adviser and all the other staff will direct queries to him.
The end result is a huge reduction in the availability of independent advice.
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