On 30 June 2016, the transitional period for recognised accountants who provide self-managed superannuation fund (SMSF) related financial advice ended. Recognised accountants who lodged applications with ASIC between 1 July 2013 and 30 June 2016, who were professional practising certificate members of CPA Australia, Chartered Accountants Australia & New Zealand or the Institute of Public Accountants, were only required to demonstrate that they had completed the appropriate financial product training.
Since the commencement of the transitional period on 1 July 2013, ASIC has received 1,146 applications for a limited AFS licence. Of these:
- 317 have been granted a licence or have been offered a draft licence
- 264 applications have been withdrawn or returned to applicants because they were incomplete, deficient or missed mandatory information
- 582 applications are pending assessment
- Two have been referred to an ASIC Hearing’s Delegate with a recommendation that they be refused.
From 1 July 2016, accountants intending to make recommendations to acquire or dispose of an interest in an SMSF must hold a limited AFS licence (or full AFS licence) or become an Authorised Representative (AR) of an AFS licensee.
ASIC has published guidance and has been working closely with the Joint Accounting Bodies to ensure that all affected accountants are clear about what ASIC requires to obtain a limited AFS licence.
On 25 August 2015 and 7 June 2016, ASIC issued public warnings [15-227MR and 16-182MR] about the consequences of not applying for, and obtaining a limited AFS licence by 1 July 2016.
"The provision of unlicensed or unauthorised financial services in relation financial products including self-managed superannuation funds is a criminal offence and significant penalties apply. Accountants and other advisers who have not had their application for a limited AFS licence approved by ASIC need to implement contingencies until such time as their applications have been approved by ASIC," said Deputy Chairman Peter Kell.
"ASIC received 38% of applications in the last month of the transitional period and while ASIC is endeavouring to give prompt attention to the assessment of these applications (along with other licence applications that ASIC has on hand and continues to receive for financial services and consumer credit products and services in Australia), we expect that the processing of these applications could take longer than usual."
Background
ASIC also notes that the transitional period enabled recognised accountants to obtain a limited licence by only having to demonstrate they had completed the appropriate training. From 1 July 2016, in addition to having to demonstrate this, applicants will also have to demonstrate that they have acquired relevant experience over the course of the previous three-year period. This will require showing that they have been providing SMSF related financial product advice, either as an employee or an AR of an AFS licensee. Deputy Chairman Peter Kell noted that: “A work history of providing services as an accountant who provided SMSF advice outside of the AFS licensing regime will not satisfy ASIC’s experience requirements to obtain a limited AFS licence.
Holders of limited AFS licences are subject to the standard Corporations Act conduct, disclosure and compliance requirements and obligations including the requirement to act in the best interests of clients and avoid accepting conflicted remuneration.