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ASIC has released a new set of guidance material for accountants providing and looking to provide financial advice, firing warnings shots in particular for those with referral relationships with property developers.
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Property ties targeted in ASIC's new guidance for accountants
23 November 2017
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Webpage guidance and three new information sheets, tailored specifically with the limited licence in mind, was released yesterday and can be accessed in full here.
Broadly speaking, further guidance on life after the contentious phase-out of the accountants’ exemption for the provision of SMSF advice has been welcomed.
“Although the majority of the information is not new, having documents specifically issued for limited license holders gives much greater confidence to accountants that were not 100 per cent sure of whether information they have read applies to them or just full licensees,” accountants services director at Merit Wealth, David Moss, told Accountants Daily.
In particular, this guidance suggests accountants should be particularly cautious about receiving payments from property developers where a client’s SMSF acquires a property.
In a case study example, ASIC said where commissions are paid to a limited AFSL holder by a property developer, they are “highly likely” to be conflicted remuneration.
“It is not uncommon to hear of arrangements like this still on offer from developers, and it would be safe to say that any licensed person should be reconsidering their business arrangements where they receive any payment on the back of a SMSF transaction,” Mr Moss said.
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Further, there are gaps in ASIC’s guidance for day-to-day issues facing accountants who have SMSF clients.
“I am… of the opinion that there was not sufficient disclosure about the six classes of financial product advice and the requirement for an adviser to be currently RG146 accredited,” Jeremy Danon, principal at Ariel & Associates, told Accountants Daily.
“In practical terms, an accountant is unable to tell a client that they will need to open a bank account for their new SMSF, unless they are authorised to provide class of financial product advice in regard to basic deposit products and be RG146 qualified. Likewise, to inform a client to maintain a sufficient level of insurance for themselves,” he said.
The guidance was developed in consultation with CPA Australia and Chartered Accountants Australia and New Zealand. CPA Australia welcomed its release yesterday.
“We are pleased ASIC has taken an educative approach to assist limited AFS licensees to properly understand their obligations as financial advisers. The depth and breadth of ASIC guidance can be confusing for practitioners new to the licensing regime. It is pleasing the relevant ASIC guidance has been consolidated into one area and complemented by the quick guide," Paul Drum, head of policy at CPA Australia, told Accountants Daily.
Our sister publication SMSF Adviser has a detailed breakdown of the gaps in the new guidance for SMSF professionals. You can read about that here.
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