End of year wind-down is the last opportunity to move on limited advice licensing

Dermot Lindsay

Accountants looking to continue offering self-managed superannuation fund (SMSF) advice to clients after the 1 July 2016 exemption cut-off are being urged to choose their licensing path before the end of the year, or risk running into serious business hurdles in the New Year.

Dermot Lindsay, National Manager Alliance Partners, Perpetual Private, said a recent survey of accountants conducted by Perpetual Private, revealed many accountants remain undecided about which licensing path to pursue and encouraged them to start taking action.

“Our survey shows that 72% of accountants have not yet started their licence application or made a firm decision about which licensing path to pursue,” he said.

The results of Perpetual’s survey are in line with figures released by ASIC in November, which showed the corporate regulator has received just 204 applications for a limited licence.

ASIC has previously advised that licence applications not received by 1 March 2016 run a significant risk of not being assessed before 30 June 2016.

“In order to meet this deadline, you really need to start planning now,” Mr Lindsay said.

“Preparation for the change, no matter which path you choose, can take several months. It’s important to recognise if you don’t get the wheels in motion by the end of the year, you’re going to face serious challenges in 2016,” Mr Lindsay said.

Perpetual Private launched a strategic alliance with boutique law firm The Fold earlier this year to offer independent accountants a licensing solution ahead of the impending removal of the accountants’ exemption. Instead of offering an Authorised Representative (AR) model, Perpetual Private’s partnership program helps accountants retain their independence and extend their advisory capabilities. It offers accountants assistance with determining the right licensing path, licence application support, guidance with policies and procedures, as well as training on the AFS regulatory requirements.

“Many accountants are fiercely passionate about their independence and they are looking for a solution which allows them to retain this. Accountants have a well-earned reputation as trusted advisers, with many clients turning to them for guidance around their SMSFs and it would be a shame for many accountants to miss out on the opportunity to continue this important service and the potential for further business growth by failing to get a licence before the deadline.

“As the Christmas wind-down is upon us, I’d urge all accountants who are yet to act to think about what is right for their business and prepare for the change ahead.”

Preparation is essential

For accountants who decide to proceed with licensing, thorough preparation is essential, with ASIC having rejected 101 applications as of November, due to inadequacies.

“Accountants should be clear about the authorisations they require and have completed the right RG146 training. It’s also important to check the adequacy of your professional indemnity insurance,” Mr Lindsay said.

“Ideally, all compliance procedures should be in place before you apply for your licence, or they certainly need to be by the time your licence is issued.”

SMSF-related advice action in three easy steps

For accountants who haven’t yet confirmed their plan of attack, Mr Lindsay suggests considering the following three steps:

Step 1: Decide if you want to advise on SMSFs: Consider how important SMSF-related advice is to your business and what policies and training you’ll need to implement if you remain unlicensed, as well as at what point, how and to whom, you’ll refer clients looking for SMSF advice.

Step 2: Authorised Representative vs. own licence: If you decide you want to continue providing SMSF-related advice, consider whether you’re comfortable with an AR model. Will you be comfortable bringing a new ‘partner’ into your business and how will this affect your independence in the eyes of your clients?

Step 3: Ensure you’re taking the right RG146 training: No matter which path you pursue, you need to make sure you have the right RG146 training. This depends on whether you choose to be an Adviser or Responsible Manager. A licensee must demonstrate RG146 training in all financial products for which the licensee is authorised, across Responsible Managers. You may also need to do additional RG146 training if you intend to provide advice on asset allocation strategies, investment strategies and SMSF life insurance needs, as opposed to just advice on setting up and shutting down SMSFs. Check what’s covered in each module with your training provider.