The Minister for Financial Services on Wed 28.11.2012, released draft regulations that would replace the accountant’s exemption with a new form of limited licence.

Mr Shorten said the proposed new licence would mean that licensed practitioners would “advise on a wider range of alternatives, rather that limiting their advice to the establishment of a self-managed super fund [SMSF]”.

As part of the Government’s “Future of Financial Advice” reforms, a new limited Australian Financial Services Licence (AFSL) was announced. Mr Shorten said this replaces the current accountant’s exemption and will see up to 10,000 accountants become licensed and able to provide a much broader range of financial advice than they were previously able to.

The draft regulations give effect to all aspects of this reform announced by Minister Shorten on 23 June 2012, including:

  • in addition to being able to advise on SMSFs and superannuation generally, licence holders will be able to give “class of product advice” on basic deposit products, general and life insurance, securities, and simple managed investment schemes;
  • streamlined experience requirements for accountants who hold a practising certificate issued by one of the professional accounting bodies (the Institute of Chartered Accountants Australia, CPA Australia Ltd and the Institute of Public Accountants); and
  • an exemption from the audit requirements for limited licence holders who do not handle client money and instead submit an annual compliance certificate.

Mr Shorten said he was also still considering whether other professional qualifications could also form part of the streamlined arrangements, eg practising certificates issued by the SMSF Professionals’ Association of Australia. “In addition to feedback on the draft regulations, I invite submissions to address this issue”, he said

The draft regulations and draft explanatory statement are on the Future of Financial Advice website.

COMMENTS on the draft regulations close on 21 December 2012.

Source: Minister for Financial Services press release No 084, 28 November 2012

[LTN 231, 28/11]

Draft legislation to limit the use of terms “financial planner” and “financial adviser” released

The Minister for Financial Services on Wed 28.11.2012, released draft legislative amendments that would restrict the use of the terms “financial adviser” and “financial planner”. The draft legislation is on the FoFA website.

In March 2012, during parliamentary debate on the FoFA reforms, the Minister announced that the Government would introduce legislation into Parliament by 1 July 2013 to define the terms “financial planner” and “financial adviser” in law.

A number of terms are defined and restricted in the Corporations Act. For example, use of the terms “independent”, “impartial” and “unbiased” is restricted, as is use of terminology such as “stockbroker”, “futures broker” and “insurance broker”. The Government says that restricting terms in this way is intended to signal to consumers certain information about the person using them eg that the person does not accept commissions or is authorised to act as a stockbroker. The Government’s view is that the addition of “financial adviser” and “financial planner” to these terms is intended to improve outcomes for consumers of financial advice services, by empowering consumers of financial services to identify genuine providers of financial product advice.

COMMENTS on the draft legislation close on 21 December 2012.

Source: Minister for Financial Services press release No 083, 28 November 2012

[LTN 231, 28/11]