Jaime Lumsden Kelly
With the transition period for accountants’ licensing ending on 1 July 2016, now is the time for accountants to decide whether or not they need an Australian Financial Services (AFS) licence.
Senior Lawyer at The Fold Legal, Jaime Lumsden Kelly, who is leading The Fold’s accountant’s licensing services, said accountants who advise clients about self managed superannuation funds (SMSFs) need to make two key decisions. “Accountants need to decide whether they need a limited advice licence or a full licence,” she said. “The limited licence allows accountants to give some kinds of general and personal advice on superannuation – including SMSFs – and provide strategic advice on basic deposit products, securities, simple managed investment schemes and general and life insurance.”
Ms Lumsden Kelly said the limited licence won’t allow accountants to provide full financial planning advice or advice on specific financial products except in the context of SMSFs. “If accountants want to provide full financial planning advice services, they will need to apply for a full AFS Licence.”
The second decision for accountants according to Ms Lumsden Kelly, is whether to obtain their own licence or whether to become an authorised representative (AR) of an existing licensee.
“Acting as an AR does avoid the time and cost of the licence application process and also the ongoing management and compliance requirements,” she said. “It also means you won’t need to appoint a Responsible Manager to satisfy ASIC that you have the capability to provide your services.”
Ms Lumsden Kelly said like anything, there are downsides to acting under a third party licence. These could include:
- Finding a licensee that aligns with your interests, your practice and your clients
- Being bound by the licensee’s approved product list in terms of the products you can recommend
- Restrictions to acting within the confines of another entity’s licence – e.g. lack of autonomy
- Potential loss of independence and impartiality in the eyes of your clients
“There’s no right or wrong answer to which option accountants should choose,” Ms Lumsden Kelly said. “The appropriate path will depend on the extent of the services offered and the extent to which independence is important. There are plenty of options on offer, so take the time to consider them carefully and seek advice if you’re in doubt.”