Login
iscover
Up to half of certain SMSF transactions are being implemented without licensed advice as trustees baulk at the higher fees associated with such advice, a new survey has revealed.
Newsletter
‘The licensing framework has failed’
26 November 2019
•
12 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
A survey of 322 accountants by Apricot Actuaries, a new brand of digital advice providers A.S.A.P Advice, has found that of 655 SMSFs established over the last 12 months, 35 per cent did not receive licensed advice.
Further, it found that of the 949 pension commencements assisted by the 322 accountants, 55 per cent were implemented without licensed advice.
The chief reason for the low uptake of advice was down to clients being reluctant to pay extra fees for advice, with 66 per cent of respondents indicating so.
Apricot Actuaries chief executive Jim Hennington said the results show that the licensing regime had failed.
“When the accountants’ exemption was repealed in 2016, it appears that ASIC was labouring under a bizarre belief that SMSF trustees would trust and voluntarily choose to pay for licensed advice under a framework riven [by] scandal and, in relation to which, the holding of a licence provided no impediment to unethical conduct,” Mr Hennington said.
“If ASIC removed the exemption to improve the quality of advice received by SMSF trustees, it has failed. In fact, it has increased the risk that trustees will not receive any advice other than tax advice.”
==
==
The survey also found that 83 per cent of accountants said they provided tax advice and factual information to assist their clients in at least some of cases where the client didn’t have a statement of advice.
“SMSFs reject the licensed advice process being forced on them,” Mr Hennington said.
“Even when transactions were implemented without licensed advice, 83 per cent of accountants still provide exempt tax advice and factual information at least part of the time to help their client make decisions. Is that legal? Opinions abound, but nobody can point to a clear answer to that fundamental question.”
A more efficient framework
Australia’s three major accounting bodies are currently working together to find a solution to overcome a highly complex regulatory framework that has hampered accountants looking to provide holistic advice.
“Accounting professionals need the flexibility to talk and engage with their clients — but this is often problematic when that advice falls under multiple regulatory frameworks in the same conversation, or even the same sentence,” said CPA Australia chief executive Andrew Hunter.
A return of the accountants’ exemption had been previously championed by the Institute of Public Accountants, but chief executive Andrew Conway believes more can be achieved by presenting the government with a new model.
“What we are saying is there is a bigger piece to work on here, which is, what does an accountant need to meet the needs of their clients?” Mr Conway said.
“The core pieces of the accountants’ exemption were SMSF establishment and wind-up, but there is so much more that accountants should be able to provide advice on and we need a consultation process to understand that more.
“We expect to be presenting the government with options for reform within calendar year 2020, because the next step for us is direct engagement with one voice of the 270,000 accountants in Australia rather than body by body.”
You are not authorised to post comments.
Comments will undergo moderation before they get published.