Accountants – don’t be shut out of super

February, 2016

By Lauree Blair, Senior Associate; and Mark Bland, Partner

Act now and get the benefit of a limited offering from Mills Oakley.

Accountants’ exemption ends 30 June 2016 – act now

What is the accountants’ exemption? It allows accountants to provide advice on the establishment, operation and structuring of self-managed superannuation funds (SMSFs), without an Australian financial services (AFS) licence or authorisation.

It will be removed from 1 July 2016.

Accountants who wish to continue giving advice to their clients about SMSFs have three options:

  1. Obtain a new “limited licence”;
  2. Obtain a full AFS licence; or
  3. Become an authorised representative of an AFS licensee.

Or, they can stop advising clients on SMSFs altogether.

ASIC will not guarantee that accountants applying for a limited licence after 1 March 2016 will have their application granted before 30 June 2016.

Even though ASIC will not guarantee it, if you start your application now there is a possibility you will get your licence by 1 July 2016. If you don’t, you will have to stop providing advice for a short period while you await your licence.

Doing nothing is an option, but there are consequences you should understand.

If you do apply, it is important that it is done right. First impressions are a key indicator to ASIC’s licensing team. It has recently been reported that around half of the applications made to date have been rejected by ASIC or withdrawn.

Risks of not acting now

(a)   Business interruptionAny accountant who is not operating under an AFS licence by the 30 June deadline will need to cease providing advice on SMSFs until they are licensed, even if they have lodged their application with ASIC and are waiting for it to be assessed.
(b)   The bar only gets higherApply now and you get the benefit of transitional arrangements, which are that you are likely only to need to pass an industry short course. After 1 July you will also have to meet the experience component, typically 3 years relevant experience in the last 5. If you don’t have this, you will need to contract this into your business which will be costly.
(c)   ASIC will be on the lookoutASIC has a very particular set of skills and SMSFs are on ASIC’s radar. They will shadow shop for sure.

Benefits of a limited licence

A limited licence will allow accountants to provide a broader range of advice than they are able to under the accountants’ exemption including to advise clients:

(a) To rollover balances from APRA-regulated funds;
(b) To cease contributions an APRA-regulated fund; and
(c) On classes of products in which to invest (e.g. securities, managed investment schemes and deposit products), but
not specific products.

It will be easier to transition up from a limited licence to a full licence than make a new application for either after 1 July 2016.

Is a limited licence worth the trouble?

Some think so but some don’t. A limited licence comes at a cost – you will need a revised professional indemnity insurance policy, membership of a dispute resolution regime and documented compliance procedures.

There are some concessions, for example, instead of an audit, a limited licensee will only need to lodge an annual compliance certificate.

Some accountants have decided to become an authorised representative of a limited licensee so that they can rely on the licensee to meet the costly obligations of holding a licence or a full licensee so that they can be authorised to provide broader advice than what is authorised under a limited licence.

What to do now

If you want to continue advising clients on the establishment, and investment activities of SMSFs you will need to start your application for an AFS licence or establish a relationship with an existing licensee now.

With our extensive expertise in licensing, knowledge of ASIC guidance and experience at the regulator, Mills Oakley is well placed to assist you with making the decision as to which option is best for your practice and how to execute that option.

We have special discounted costs for limited licences started with us before 31 March 2016. Our costs will be capped at the following:

Contact Mills Oakley

Please note that this legal update is a brief summary only and is general in nature.  The proposed law in this area is complex.  Always seek specific advice from Mills Oakley in respect of your particular circumstances.  

If you require any further assistance, please contact: 

mark-bland

Mark Bland | Partner 
T: +61 3 9605 0832
E: mbland@millsoakley.com.au

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