ICAA acknowledges ASIC concern over advice certificates
Hugh Elvy
The Institute of Chartered Accountants (ICAA) has acknowledged the concerns of the Australian Securities and Investment Commission (ASIC) that accountants are signing capacity to repay loan certificates, known as advice certificates, without knowing the borrower's financial situation.
"The institute has recently communicated with members the need to be cautious when signing advice certificates in regards to self-managed superannuation funds (SMSFs)," said Hugh Elvy, head of financial planning and superannuation at the ICAA.
ASIC recently released a report examining a small amount of cases where accountants provided advice certificates to borrowers without investigating their finances or their ability to repay a loan. Some lenders rely on the certificates to verify that borrowers can repay loans. ASIC put out an alert to accountants voicing its concerns following the release of the report.
Delia Rickard, the acting executive director of consumer protection at ASIC, said: "Relying on an accountant's certificate effectively shifts the risk of credit assessment from the lender to the accountant. Accountants need to be aware that certifying a capacity to repay [loan] without making proper enquiries may expose them to legal action.
"ASIC urges all accountants who provide capacity to repay certificates to check they have appropriate systems in place to ensure there is a reasonable basis for providing the certification in every case," she said.
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