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Thursday 3 May 2018

18-127MR ASIC reviews accountant compliance with changes to SMSF advice licensing

ASIC has completed a review designed to identify unlicensed accountants recommending clients set up self-managed superannuation funds (unlicensed SMSF advice). The review found no systemic concerns around the provision of unlicensed SMSF advice but did identify significant levels of inaccurate and out of date information on websites and in promotional material of accountants reviewed.

Since 1 July 2016, accountants need to be covered by an Australian financial services (AFS) licence in order to recommend that their client set up an SMSF.

ASIC used a broad range of sources to identify accountants who were possibly providing unlicensed SMSF advice, including:

  • information provided by the Australian Taxation Office (ATO)
  • information obtained in the course of ASIC's current project looking at the quality of SMSF advice
  • information available from AFS licence applications provided to ASIC
  • reports of misconduct from members of the public
  • the outputs of a regulatory technology tool used to scan accountants' websites for potential compliance issues
  • search results produced by a social media analytics platform used to scan statements made on blog posts, forums and social media
  • publicly available advertisements or statements about SMSF services or specialisation.

Further enquiries revealed that most of the accountants identified were not providing unlicensed SMSF advice. 

Two main factors contributed to ASIC initially targeting accountants who were then found to be complying with the law, and not providing unlicensed SMSF advice: 

  • The services listed on accountants' websites had not been updated to reflect changes since the accountants' exemption was repealed on 1 July 2016.
  • Incomplete information was provided on websites, for example, websites did not state AFS licence details, or that an accountant was an authorised representative or had a referral arrangement in place.

ASIC has followed up with all accountants identified as part of the review who need to update their website.

ASIC also reminds any other accountants who may not have updated their service or AFS licence details on their websites, to do so. Having clear and accurate disclosure of any relevant AFS licences, as well as services provided and who provides them, is important for consumers and should avoid future misunderstandings.

ASIC continues to make enquiries of five accountants whose services we have concerns about, and will take appropriate regulatory action where necessary.

Unlicensed advice poses a high risk to consumers, and ASIC encourages anyone who becomes aware of potential unlicensed conduct to submit a report of misconduct using the online form on our website.

ASIC will continue to work with the ATO to identify any accountants who may be providing unlicensed SMSF advice.

Background

An exemption in the Corporations Regulations 2001, which allowed recognised accountants to give financial product advice about acquiring or disposing of an interest in an SMSF without being covered by an AFS licence, was repealed on 1 July 2016 (accountants’ exemption).

Since the repeal of the accountants' exemption, accountants who wish to provide advice about acquiring or disposing of an interest in an SMSF must now be covered by an AFS licence (either by holding a licence or as a representative of a licensee).

To facilitate accountants moving to the AFS licensing regime, the Government created an alternative form of licence, known as a 'limited licence', which enables the licensee to provide a limited range of financial services relevant to SMSFs. Accountants and other advisers have been able to apply for a limited licence since 1 July 2013.

Last updated: 03/05/2018 12:00