As I sit here pondering life, I note that life is about uncertainties – well, the degree of uncertainty that one specific event will yield. For example, calling a coin toss will have a 50% certainty of being right. Forecasting the weather will have a slightly different variable and picking the stockmarket will have a far lower certainty.
On the other hand, I look at the events that are as close to certain as one could imagine – such as my dachshund’s wagging tail, a South African cricket batting collapse (sorry) and the sun rising in the east. We can now add to that one further event – the failure of the limited licensing regime.
About ten years ago, we were introduced to new laws, which were part of the new FOFA regime, which mandated that accountants who provided certain services governing SMSFs were now required to be licensed as these activities were now considered to be a financial service, and thus, they were subject to the provisions of Chapter 7 of the Corporations Act.
Now let’s be clear here – I am not referring to accountants who provided services that were akin to financial planning. I am referring to a qualified accountant who could formerly provide advice on the tax implications of an SMSF, recommend whether it was a suitable vehicle, arrange for the fund’s establishment and finally to give high level advice on where to invest the money that would be deposited into the SMSF – for example, buy some shares, invest in a fund, ensure you have appropriate insurance. This was due to the accountant’s exemption (since repealed) pursuant to 7.1.29A of the Corporations Regulations.
Obtaining a limited AFS Licence was tough enough, but wait, there’s more. Add in the ongoing legislative and regulatory obligations; the requirement that an accountant had to be fully RG146 compliant just to provide class of financial product advice (that is, very broad, non-specific high level advice); the requirement to become a Financial Adviser and obtain additional accreditations and be subject to increased annual CPD; the additional cost involved in maintaining not just the AFS Licence but also to maintain Financial Adviser status……
So, what do you think would happen? Yes, that’s right, accountants would get out of the sector because it just was not worth it. SMSF Adviser has published a telling article on the number of accountants who are no longer operating under a limited AFS Licence. The article states a 35.32% decrease over the 2022 calendar year!
To me, this whole sorry saga has had a detrimental impact on not just the accounting profession but also to their clients who place a great deal of reliance and trust with their accountant.
If only I could pick a stock with as much certainty as I could with the limited licensing regime…..
Should you have any queries about ASIC or other issues involving compliance, licensing, or corporate governance, please contact Jeremy Danon, director of Ariel & Associates Pty Ltd on (02) 8223 3355 or at jeremy@ariel.associates. Further details on our website – www.ariel.associates.