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16-182MR Limited AFS licensing regime: Transitional arrangements end 30 June 2016
ASIC today warned that from 1 July 2016, accountants must hold a limited Australian financial services (AFS) licence or be an authorised representative of a licence-holder or licensee in order to provide financial product advice on self-managed superannuation funds (SMSFs).
This follows the three-year transition period that commenced on 1 July 2013.
On 25 August 2015, ASIC issued a media release warning accountants wishing to apply for a limited AFS licence that failure to lodge applications in line with ASIC’s requirements by 1 March 2016 would result in a significant risk that their application would not be assessed and approved by 30 June 2016 (refer: 15-227MR).
ASIC is now writing to applicants for limited AFS licences who have applied since 1 March 2016 advising them that they should prepare for the contingency that their applications may not be assessed and approved by ASIC by 30 June 2016.
In cases where ASIC has received an application but has not granted a licence by then, the applicant will not be able to provide SMSF-related financial advice and dealing services. They will not be able to give such advice until they are granted a licence or they become an authorised representative of a licensee.
Senior Executive Leader, Assessment & Intelligence, Warren Day reminded accountants that after 30 June 2016, any accountant found to be providing unlicensed advice risked regulatory action. Mr Day said, 'Providing unlicensed financial services is a criminal offence.’
Accountants who intend to get their application to ASIC before 30 June 2016 should be aware that only complete applications will be accepted for lodgement.
The current ‘accountants’ exemption’ under regulation 7.1.29A of the Corporations Regulations 2001 permits ‘recognised accountants’ to provide a recommendation in relation to an SMSF, without the need for an AFS licence.
As part of the Future of Financial Advice (FOFA) reforms, this exemption will cease to apply on 1 July 2016.
Since 1 July 2013, accountants have been able to apply for the new limited AFS licence or become an authorised representative.
ASIC is currently assessing more than 300 applications for a limited AFS licence. The time it will take to assess these applications will depend on the quality of the applications, as well as the other work ASIC’s licensing team is undertaking.