The Australian Securities and Investments Commission (ASIC) is hot on the heels of accountants, sending “please explain” letters to accountants they believe may be in breach of financial services laws, according to The Fold Legal.
Solicitor director, Jaime Lumsden Kelly, and head of licensing, Sonia Cruz, wrote in a blog that ASIC was using regtech to review the website content of accounting practices en masse. The use of regulatory technology has allowed them to easily identify if any unlicensed accountants appeared to be providing financial services.
Furthermore, unlicensed accountants who have realised they needed a licence now to operate would now need to first operate as an authorised representative for at least three years before they could apply for a licence. This was because ASIC had decided that any experience they had gained while being exempt from licensing could no longer be used to obtain an Australian financial services licence (AFSL).
The ASIC letters ask unlicensed accountants to explain why they did not require an AFSL, provide any legal advice that supports their position, and if the accountant thinks they do need an AFSL, they must explain what steps they were taking to obtain one.
“While these may seem like relatively simple questions to answer, many accountants rely on a plethora of exemptions, including the tax advice, SMSF [self-managed superannuation fund] establishment, business valuations and risk management exemptions, among others,” Lumsden Kelly and Cruz said.
“This means even accountants who are legally operating without an AFS licence may find it difficult to articulate exactly why they are exempt from financial regulation.”
They also wrote that some accounting practices may have found they now required an AFSL, such as accountants who continued to operate in the SMSF establishment space after 1 July, 2016 but did not restructure their services properly.