Accountants who are thinking about providing SMSF advice should choose the licensing option that best suits their business model, says the SMSF Professionals’ Association of Australia (SPAA). Liz Ward, Head of SPAA’s Education Services, said 1 in 4 accountants who are SPAA members (and not operating under an Australian financial services licence (AFSL)) have decided to apply for a new limited AFSL for accountants, or become an authorised representative (AR) of a licensee. According to polling at SPAA events, another 50% of members who are not licensed accountants are “seriously considering this option”, with only 25% indicating they might not apply for a limited AFSL (or become an AR).
SPAA says that it is imperative that accountants understand the pros and cons of being an AR as opposed to getting a licence directly with ASIC (either full or limited). A benefit of becoming an AR is that the main cost of the licence is borne by the licensee. An AR may also have access to more licence authorities than they would receive from ASIC under their own licence. However, other considerations that SPAA notes about becoming an AR include: ARs pay a regular ongoing fee to the licensee; ARs may be subject to strict contractual requirements (eg supervision, compliance, reporting etc); branding rights may be restricted; and potential conflicts with the licensee.
SPAA notes that the cost of preparing and submitting an application for a limited licence can range from $25,000 to $35,000 in the first year (including compliance consultancy fees to prepare the application and supporting documentation). While compliance costs can be reduced by preparing the application yourself, Ms Ward this DIY approach would still require a significant investment of time. With either approach, Ms Ward said accountants could expect to take up to 12 weeks from beginning to end of the application process. When added the RG146 requirement (or other prerequisite training), the lead time starts to add up, Ms Ward said. As such, SPAA has encouraged those thinking about providing SMSF advice as part of their business model to start researching their licensing options. While the existing accountants’ exemption is in place until 1 July 2016, SPAA says accountants should not leave it too late.
Source: SPAA media release, 16 August 2013
[LTN 158, 16/8/13]