Laggard accountants risk regulatory whipping
Accountants continue to drag their feet with respect to the new limited licensing regime but, as Mike Taylor reports, they risk provoking a regulatory shadow shop.
With little more than three months to go before the accountants licensing regime comes into force, it is worth noting that, by the beginning of April, fewer than 500 accountants had lined up to be licensed by the Australian Securities and Investments Commission (ASIC).
To say this runs contrary to the expectations which prevailed in the financial planning industry two years' ago is an understatement.
At that time, major dealer groups were devising strategies aimed at deriving significant commercial benefit from the hundreds of accountants they expected to become licensed.
And it was not just the financial planning dealer groups which gauged it wrongly. So, too, did the major accounting groups which expended a good deal of time, money and effort on seeking to educate their members on the new licensing regime which replaces the accountant's exemption.
It has also confounded the myriad of consultants who have argued that accountants ought to be pursuing the provision of advice because it represents a necessary additional revenue stream to offset the reduced revenues flowing from areas subject to digital disruption.
While few people are saying it publicly, the prevailing view attaching to the dearth of accountants moving to become licensed is that many risk being in breach of the regulatory requirements when the new regime comes fully into effect from 1 July.
The degree to which accountants involved in the establishment and maintenance of self-managed superannuation funds (SMSFs) will be exposed to possible breaches was made clear during the SMSF Association's annual conference in Adelaide earlier this year.
The message was that, in the absence of being licensed, they would be walking a tight-rope in terms of what they could and could not say to clients in terms of the establishment and running of a superannuation fund.
Removing any doubt about the consequences of giving SMSF-related advice without being appropriately licensed, ASIC commissioner, Greg Tanzer used his time at the SMSF Association conference to make the position clear.
"Frankly, if you decide after 1 July to give advice on establishing or operating an SMSF and you don't have the requisite licence, where you're not operating under a licence for someone who does, you're acting illegally. Then you're joining the club with the investment scammers, the property spruikers, and all of the other people who choose to operate illegally."
The question accountants must ask themselves is whether, knowing how few accountants have become appropriately licensed, ASIC will move sooner rather than later to shadow shop the accountancy industry.
What Tanzer also made clear to the SMSF Association conference was that, just like financial planners, the regulator regards accountants as being "gatekeepers" with respect to the provision of SMSF-related advice.
So where does this leave financial planner dealer groups and the like of CPA Australia Advice who are seeking to provide licensing arrangements for accountants operating in the SMSF advice space?
The answer is that they have not changed their strategies or approach. Dealer Groups such as Count Financial and Premium Wealth Management are continuing to offer their licensing arrangements to accountants in the expectation that, over time, the necessary decisions will have to be made.
Then, too, there is the sense of urgency which can be generated by the likelihood of an ASIC shadow shop.
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