Many accountants are still yet to make a
concrete decision about whether to obtain a limited
Australian financial services (AFS) licence.
Right now I see 4 possible pathways for
accountants in the SMSF space:
1.
Stop operating altogether in the
SMSF sector;
2.
Re-structure your business to
refer SMSF work “out” to a suitably qualified AFS licensee;
3.
Become a representative of an
established AFS licensee – institutional or otherwise; or
4.
Become self-licensed by
applying for a limited AFS licence
Let’s consider some of the practical issues
involved:
Options
1 & 2: Stop operating in the SMSF space, or refer SMSF work out
The first two pathways are fraught if you
want to still help clients with their retirement needs after 30 June 2016. If
you plan to refer SMSF work out, you will need to make sure your business has
clear policies for staff on what they can and can’t say to clients.
Incredibly, I am hearing that some
accountants intend to just ignore the licensing regime and continue
establishing SMSFs after July without a licence. I know how easy it would be for ASIC to get
data from the ATO to confirm SMSFs established and the accountant who
established them. ASIC will pursue unlicensed operators
through the courts.
Option
3: Become an authorised representative of another licensee
The third pathway is really just a default
choice, but the price of choosing this path is not just your independence (because
dealers need to actively control what their representatives do), but also any
dealer fee you must pay for the “safe harbour” of someone else’s AFS licence.
Anyone thinking they can simply “test the
waters” with a dealer now and maybe opt to get their own limited AFS licence
later should know this: “relevant experience” tests apply from July 2016. This
means that each responsible manager will need to demonstrate 3 years’
experience in providing the relevant financial services. We simply don’t know
yet if, after 30 June, ASIC will accept experience gained under the current accountants’
exemption.
So if you take this third pathway, you may
have to wait until at least July 2019 to extract yourself from an unhappy
marriage with a dealer. Therefore, those who are considering applying for a limited
AFS licence of their own should consider applying by 30 June 2016 because
the “experience” requirement is waived until that date.
Option
4: Obtain your own limited licence
The fourth choice – getting your own limited
AFS licence – seems the logical pathway for anyone who wants to be able to
dictate how they operate their SMSF business after 30 June.
Long term, I believe there will be a
competitive advantage for any accounting practice that self-licenses because
they will be able to adopt new ideas and adapt their business quicker than
their dealer-controlled competitors. And the ongoing compliance obligations are
simply not as brutal as some dealers would have you believe.
Don’t ignore the changes. Choose a pathway, choose carefully
and choose now.
