The unnecessarily arduous application process for limited licensees have meant limited licensees have been at a disadvantage compared to full licensees, a law firm said.
The Fold Legal wrote in a blog that ever since the accountants’ limited licence regime was introduced, accountants had lost the ability to appoint responsible managers who do not have three years’ regulated experience due to a policy change by the Australian Securities and Investments Commission (ASIC) for financial services relating to self-managed superannuation funds (SMSFs).
Solicitor director, Jaime Lumsden Kelly, said this was at odds with ASIC policy for full licensees who could appoint responsible managers using a broad range of experience, such as those who are competent in general insurance because of unregulated reinsurance experience.
“The inconsistency has created a huge issue for licensed accountants with RMs who wish to retire, or have fallen ill unexpectedly,” she wrote.
“If an accountant needs to change their RM before the third anniversary of their licence, they will need to contract someone to fill that role, because no new RMs will now meet ASIC’s competency requirements for SMSFs prior to that date.”
ASIC’s decision to change the “tax advice exemption” for licensees has also had an impact on licensed accountants and their employees,” Lumsden Kelly said.
Previously any person could provide tax advice without holding an Australian financial services licence (AFSL) even if it was also a financial product advice because the exemption meant tax advice was treated as if it was not a financial service at all.
“While ASIC correctly identified that a licensee would not be able to comply with this exemption, because they could not make a statement that they were “not licensed”, in attempting to solve that problem, new problems were created,” Lumsden Kelly said.
“ASIC could have simply solved this conundrum by modifying the disclosure – ‘this advice is not subject to financial services regulatory protection’ would have been sufficient.”
Accountants operating under the limited licence regime would be most affected because it had created significant inconsistencies in the treatment of tax advice between licensed and unlicensed accountants.