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The limited licensing model is “dying” with fewer than 600 accountants now operating under the scheme, the association says.
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SMSFA laments ‘accountants out in cold' in QAR reforms
18 December 2023
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The SMSF Association has issued an open letter to members expressing strong reservations about key aspects of the government’s proposed QAR reforms including that accountants have been “left out in the cold”.
SMSFA CEO Peter Burgess said the association welcomed some positive aspects to the government’s final QAR response, including the proposal to introduce a “modernised and flexible best interests’ duty that will see the removal of the ‘safe harbour’ steps”.
“When coupled with the replacement of statements of advice (SOAs), we believe these changes will make a material difference to the cost of advice,” he said.
It was also “pleasing” to see the government confirming that the Financial Planners and Advisers Code of Ethics 2019 would be reviewed following the implementation of the package.
But it was essential that to ensure the code was “fit for purpose and operates as intended alongside the government’s reforms”.
“Concerns have persisted since the implementation of the code and whether it operates as intended alongside existing legislated obligations,” he said.
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“Aspects of the code have been a cause for concern for some time, with a review and remediation overdue.”
Additionally, Mr Burgess said that an alternative advice framework for the superannuation sector was anticipated and necessary for the large superannuation funds to wholly discharge their duties under the retirement income covenant.
But he was surprised to see the banks included in these reforms.
“We acknowledge the need for broader advice to be available to consumers. But the introduction of a new category of adviser called a ‘qualified adviser’ has the potential to be misconstrued,” he said.
“It certainly requires much further consideration. At this stage it is difficult to assess the impact of this new category of adviser when the scope of advice, and the education requirements, experience, and supervision requirements which underpin it, have not been released.”
Most concerning in the proposed reforms was the exclusion of accountants, who were “still out in the cold”.
“Despite accountants’ advice being included in the QAR terms of reference, there was again no mention of accountants and the role they play in the advice process in the final report,” Mr Burgess said.
“The lack of a suitable model for appropriately qualified and experienced accountants is an opportunity lost and a poor outcome for consumers. It leaves a critical gap in the financial advice framework, particularly for SMSF trustees who have ongoing advice needs not involving product placement, portfolio management or discreet investment advice.”
He said the limited licensing model was “dying” with only 598 accountants operating under the scheme at the end of November.
“Increasing licensing costs, ASIC adviser levies and now the compensation scheme of last resort will see this cohort continue to exit advice at a time when more licensed advisers are urgently needed. Put simply, it is not fit for purpose,” he said.
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