Accountants operating under the new limited licensing regime to provide advice on self-managed superannuation funds (SMSFs) remain confused about various elements including compliance obligations and documentation such as statements of advice, according to the corporate regulator.
The Australian Securities and Investments Commission (ASIC) said it had visited 20 limited Australian financial services licensees (AFSLs) during 2016-17 to assess how they were operating under their new licences and to promote compliance with their AFSL obligations following the removal of the accountants’ exemption to provide SMSF advice.
Areas of concern identified by ASIC included:
- Licensees were uncertain about what resources they would require to monitor compliance and what steps they needed to take to comply with their general licensee obligations;
- Confusion about what information needed to be included on the Financial Adviser Register (FAR), with nearly half the licensees not yet having updated the register with adviser information; and
- Where licensees had not yet provided advice about SMSFs, they were unsure about what documents needed to be provided to clients, what those documents should entail and when they had to be provided to clients, including the requirements around statements of advice.
“Limited AFS licensees who have not recorded any advisers on FAR are likely to be in breach of the law,” ASIC said.
ASIC said it would be providing additional education resources for limited AFS licensees, especially around their ongoing compliance obligations and client engagement. ASIC would also contact limited AFSLs who had no advisers recorded on the FAR to remind them of their obligations in relation to the register.
“The licensees ASIC visited indicated they were actively seeking training and assistance on a number of aspects of the AFS licence regime,” ASIC said.
ASIC also found only half of the licensees had provided advice at the time of their visit, with most of the licensees still establishing their business under the new regime, illustrating financial advice was still not a large part of their business.
ASIC deputy chairman, Peter Kell, told the SMSF Association conference earlier this year that ASIC was visiting accounting firms to ensure they were complying with new licensing requirements and “check to see whether anyone is still thinking that they can carry on like they were before and not comply with the new regime”.
ASIC said it had granted 787 limited AFSLs as at 30 June 2017.
