The draft regulations for the accountants exemption have been released by the Government and ushers in an exciting new world for SMSF advising.
Importantly it introduces a new and simple SMSF strategy licence where accountants can offer strategic non-product advice on SMSFs provided they have completed specialist RG146 SMSF Adviser training.
The Government and accounting industry expects more than 5,000 accountants and accounting firms to seize on this low level licensing and taking up the option to become ASIC licensed rather than becoming an authorised representative of an existing AFSL.
Importantly the new licence does not allow specific product recommendations but is designed to enable accountants and any financial advisers who may hold this licence to provide more strategic and low-cost forms of financial advice which will greatly assist Australians to manage their finances effectively.
"This reform will also benefit thousands of small businesses by creating a significant opportunity for accountants and financial advisers who wish to grow and diversify their business" according to the Assistant Treasurer.
Although there is a streamlined and low cost transitional period to 30 June 2016 it is expected that many thousands of accountants will move sooner rather than later to become a licensed SMSF Adviser as the existing accountant's exemption is very narrow.
The new licence will provide accountants with the comfort of being able to provide a wider level of SMSF advice plus ensure that any potential changes down the track to SMSF licensing arrangements will not affect early licensees.
In addition prior licensing experience shows that with any transition period the first few are the lucky ones with hurdles raised for those coming later in the transition period. Unlike other AFSL's, the exempt licensees will not require a full financial audit but instead a self-assessed compliance audit.
The purpose of this lower requirement for accountants and financial planners that do not deal with client's money but only their strategy is to save thousands of $$ in annual licensing fees. This low cost licensing process is also wrapped up into the granting of "prior experience" status to accountants with a public practicising certificate - another big cost saver and one designed to cut form filling, at this stage to a bare minimum.
In a futher bid to reduce costs, for partnerships and companies only those partners or directors with the requisite public practice certificate and RG 146 training will be able to sign off on any advice - also minimising the need for all partners and staff to meet licensing requirements.
So the line up for accountants is finalised - do they take on an exempt license directly and control their advice and destiny or do they line up with one of the big wealth managers and their offshoots to become an authorised representative of them?
Only time will tell but the accounting bodies appear confident that they know what their members want - their own exempt license.