Brett Walker, Managing Director of SMART Compliance
Here we are in May and so many accountants still appear to be waiting for something to crack at ASIC so they don’t have to rethink their business models after June.
Unfortunately, like Margaret Thatcher in the ‘80s, ASIC is “not for turning”. There’s no relaxation of the June 30 deadline to apply for a limited Australian financial services (AFS) licence on the horizon – and if you don’t get licensed by then, you lose the opportunity to get your own licence for at least three years.
That’s tight timing.
If you’ve never worked under an AFS licence before, you cannot hope to convince ASIC after June that you have “relevant experience” to obtain your own AFS licence – and you will have to work for someone else, under their AFS licence.
That may suit some people but I get the message from most accountants I talk to that a lack of independence is their greatest fear.
These are the alternatives:
- Join another AFSL and take orders from the; or
- Reconfigure your business to not get caught by the new licensing rules.
Self-licensing should be the goal of any accountant who values independence.
Joining another AFSL
Joining another AFSL can sound like a neat solution. Given some professional bodies are offering their own AFS licence services, it may become the port of last call for some.
It is important to remember that becoming an authorised representative of another AFS licence means you declare to each client you advise on SMSFs that you act for someone else (the AFSL) and not yourself.
This may come as a surprise to your client so be prepared for some obvious queries like “Who are they?” and “Why are you doing that, you’re my accountant and my tax adviser.”.
Being a representative of someone else also means they get to scrutinise your work (which they are required by law to do) and this may mean more intrusive compliance processes than you would otherwise prefer.
Avoiding the AFS licence rules altogether
The path to avoiding the new regime is being considered by many accountants.
The implications are fairly significant if you have built a business advising clients on the best way to structure their retirement arrangements.
From July you will not be able to give any advice about superannuation which might be deemed “financial product advice”.
That type of advice is very broadly defined in the law, and possibly even more broadly interpreted by the regulator.
Purely factual information and advice that is demonstrably tax advice is about all you’ll be able to give to your clients.
And you’ll need s to refer your clients if you want them to receive anything more than broad asset allocation advice – bear in mind that most clients will seek someone who can help them with that level of detail in any case.
Options on the table
The options are clear for anyone still in doubt:
- Self-licence to maintain maximum control.
- Become someone else’s representative to maintain your business post-June.
- Change your business to avoid the onset of AFS licence rules from July.
I don’t envy anyone still grappling with the options but I know which option gives you the most control of your destiny.
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