Harsh new super adviser restrictions

Under new rules in the Financial Services Reform Bill accountants may be liable for harsh penalties if they provide superannuation advice to clients without holding a financial services licence.

The new rules prohibit accountants from “recommending that a person take an allocated pension or other income stream over a lump sum without being licensed”. However, an accountant is able to provide factual information detailing the taxation of lump sum benefits and allocated pensions, as long as they do not recommend which to use.

Chartered accountancy firm William Buck director Anna Carrabs believes the law is over reaching itself in this area and creates unnecessary questions about the credibility of accountants.

“This new rule is unfair on accountants, who are often asked by their clients for simple advice about allocated pensions and other retirement income options,” she said.

According to Carrabs, accountants will now have to invest their time and funds to acquire a financial adviser’s licence or form an independent association with a financial adviser.

And forming an independent association “is not a preferred option for many accountants, as they may not know or have a financial adviser nearby who can service their clients”, she said.

The bill summarises that advice can be given by a tax agent if its in the ordinary course of activities as a tax agent, such as analysis of tax implications of segregated or unsegregated assets and explanations of the tax requirements of a pension. But the accountant cannot provide advice in relation to specific investments in the fund.

Also, under regulation 7.1.29(5)(a) accountants are allowed to provide advice on a self-managed super fund (SMSF) in relation to restructuring the compilation of member accounts on retirement, provided the person advised is a trustee, director of the trustee, or a person who controls management.