Going forward, SMSF advisors, including accountants, will require a licence under the Australian Financial Services (AFS) Licence framework. This is because the Accountants’ Exemption is going to be removed as of 30 June 2016.
What is the Accountants’ Exemption?
The Accountants’ Exemption was introduced in 2013 as a part of the Financial Services Reform Act 2001. The Exemption enables recognised accountants to be able to advise clients when establishing or winding up a SMSF. A recognised accountant is an accountant that is part of CPA Australia, Chartered Accountants ANZ or the Institute of Public Accountants.
Future Compliance Obligations
As of 30 June 2016, AFS licence holders have to practice ongoing compliance with the following obligations:
- Organisational competence obligation: this general obligation covers staff knowledge and skills, record keeping, and the conduction of reviews when making changes to the business. This obligation adds a lot of administration costs to assisting clients in managing their SMSFs.
- AFS licence holders must undergo training. Training requirements are outlined by the ASIC Training register and vary for different advisory activities. These courses cover specialist knowledge, or alternatively, licence holders can be assessed by an authorised assessor. This also adds to the costs of offering SMSF advice.
- Compensation requirements: the primary way to comply with this obligation is to have professional indemnity (PI) insurance cover which drives up costs of providing SMSF advice.
- Financial requirements: there are minimum financial requirements that relate to solvency and positive net assets, cash needs, and auditing while there are additional requirements for businesses with specific risks.
Increased Obligations increase costs of providing SMSF advice
All of these obligations, especially the ongoing training and organisational compliance, will increase the operations costs of being able to provide advice to clients about SMSFs.
We will help out our clients avoid these cost rises by holding a promotion so that you can avoid higher fees and enjoy our limited recourse loan documentation offer during promotional period.
If you have any questions regarding SMSF or wealth management, please don’t hesitate to get in touch with the team at Fortis Accounting Partners. You can reach us on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.
