Accountants who continue advising on self-managed superannuation funds (SMSF) without a licence post the accountants’ exemption risk not being covered by their professional indemnity insurance.
That was the warning from insurance broker, Marsh Advantage Insurance, which said accountants who advised without a licence risked facing a tribunal for professional misconduct where they could be fined, suspended or banned, or they could lose membership with professional bodies.
“When it comes to professional indemnity, insurers treat accounting and financial advice very differently. So if you’re transitioning into the financial advice space, you need to be covered for both activities,” the firm said in a blog on the Count Financial website.
The firm covered four areas:
- If accountants operated under their own full Australian financial service licence, they would need to attain a separate financial adviser’s policy, as the accountant policy alone would not cover them. Annual premiums could be quite expensive at around $15,000 plus fees and charges;
- Licensees would manage professional indemnity insurance for those operating under an existing licensee’s AFSL and premium costs would be covered by the licensee’s fees. Nevertheless, accountants should be aware of how much cover they have;
- Those who have a limited licence to provide SMSF advice only may already be covered, or the insurer may offer an endorsement or extension of the policy to include this. Again, accountants should make sure of this to avoid a gap; and
- Those who are not authorised financial advisers would not be covered by professional indemnity policies for any advisory activities including SMSF. But accountants must make sure they are covered for other activities like tax services, forensic accounting, and auditing.
Accountants who are members of the Institute of Chartered Accountants, Chartered Accountants Australia and New Zealand, or CPA Australia should have at least $2 million of cover, the firm said.
