The following Frequently Asked Questions relate to the Accountants’ Exemption.
What is the latest?
The Institute in conjunction with CPA Australia, released the first of a range of resources to assist members in considering their options for when the ‘accountants’ exemption’ is removed from 1 July 2016.
The Information guide: Accountants’ exemption reform has been developed to provide an overview of the new limited licence and the resources that will be provided to members. The overview also outlines the reform and options to address the reform. We recommend members read this guide first.
One of the options available for members is operating under another entity’s Australian Financial Services (AFS) Licence. The Institute has developed a table of issues you may want to consider when selecting an AFS licence – Considerations when selecting an Australian Financial Services (AFS) Licensee.
Resources currently available for Certificate of Public Practice holders
A range of resources have also been developed for members who are Certificate of Public Practice holders and are considering applying for new limited Australian Financial Services Licence including:
- Limited Australian Financial Services licensing: Your obligations – this guide has been developed to help members understand their obligations of holding a limited AFS licence.
- DIY Licensing Kit – this kit provides a step-by- step guide to obtaining a limited AFS licence including a Compliance Manual and a sample application for a limited AFS licence.
These resources have been emailed out to members who have previously registered an interest in receiving these resources. If members have not already registered interest, email and confirm you are a Certificate of Public Practice holder and provide your membership number.
Further resources to be released
Further resources will be released including a Statement of Advice (SOA), Financial Services Guide (FSG) templates, and specific fact sheets. The next guide will be the Financial Services Advice and Regulations: Accounting Industry guide which is currently being updated. This guide will assist members understand the services that can be provided without a licence.
When is the accountants’ exemption going to be removed?
The accountants’ exemption continues in its current form until 30 June 2016.The new conditional AFSL arrangements will apply from 1 July 2013, and will continue through a three year transition period which will end on 30 June 2016.
What is the accountants’ exemption?
The accountants’ exemption was introduced in 2004 as a component of the Financial Services Reform Act 2001 package. This reform package was based around a single licensing regime for the provision of financial advice. As part of these reforms, accountants were provided with a range of exemptions so they could continue providing their traditional accounting services such as tax and compliance. In addition, a self-managed superannuation fund (SMSF) exemption was provided for recognised accountants (members of the Institute of Chartered Accountants in Australia, CPA Australia and the Institute of Public Accountants) to enable them to advise on the establishment and closure of SMSFs without requiring to hold or operate under an Australian Financial Services License (AFSL).
What replaces the accountants’ exemption?
A new conditional Australian Financial Services License (AFSL) that recognises the education, training and experience of professional accountants as the trusted advisers to millions of Australian consumers and businesses right across the country.
How is this different to the current exemption?
Previously under the accountants’ exemption members could only provide advice on the setup and closure of SMSFs. Whilst the exemption was perceived workable there were a number of deficiencies and limitations as to the service offerings chartered accountants could provide to clients. Going forward from 1 July 2016 to advise on SMSFs you will require a license under the AFSL framework.
What sort of advice can you provide under this new framework?
In regards to superannuation SMSFs accountants will be able to provide advice around SMSFs, pensions, rollovers and consolidation involving SMSFs for example.
Other areas include
- Advice on the sorts of life insurance cover (for example, life cover, total and permanent disability cover, trauma cover and income protection) that would be appropriate for a client in light of their relevant circumstances (for example, their existing level of cover) and whether they should hold the cover directly or through a superannuation fund
- Advice on which simple managed investment scheme would be appropriate for and in the best interests of a client – for example, cash funds versus equity funds
- Advice on whether shares are an appropriate investment option given a client’s relevant circumstances including their tolerance for risk and whether alternative classes of product might be more suitable
- Advice on the types of basic deposit products that would be appropriate for and in the best interests of a client saving for a home deposit (for example, term deposits, online savings accounts or first home saver accounts).
What will the new licensing framework look like?
The new licensing framework will require members/practices to apply for a license through Australian Securities Investment Commission (ASIC). In order to apply for the licences applicants need to satisfy the following criteria:
- Relevant practical experience
- Training requirements
- Compliance requirements
- Professional indemnity insurance requirements
- Being a member of an external dispute resolution scheme e.g. Financial Ombudsman Services.
Chartered Accountants who hold a current Certificate of Public Practice (CPP) will be able to satisfy ASIC that they possess sufficient ‘relevant experience’ to be eligible to apply for a conditional AFSL, subject to complying with the relevant training requirements prescribed in RG 146.
Do I need to be licensed to setup a SMSF?
Yes, the AFSL regime applies to all professionals wishing to provide advice about Self Managed Superannuation Funds.
What do I need to do now?
Members are reminded that the accountants’ exemption continues in its current form until 30 June 2016. There is still plenty of time to work through how the licensing regime will impact on you and what options are available to you. There is no need to make any immediate decisions.
There is value for members and their practices to begin to consider how they would like to operate and how they wish to incorporate financial services into their practice and the service offerings they provide to their clients.
Members are encouraged to review the Institute’s range of resources and do their research in order to make an informed decision.
The Institute has recently released an Information Guide: Accountants’ exemption reform which provides an overview of the reform and some background. Members should read this first as part of the process in assessing their options.
One of the options for members is operating under another entity’s AFSL, we have developed a matrix for Considerations when selecting an Australian Financial Services (AFS) Licensee. This matrix provides details of a range of issues you may wish to consider or ask potential AFS Licensees you may be in discussions with. Both of these documents are available on the Institute’s website.
A further guide the ‘Financial advice & regulations: Accounting Industry Guide’ that outlines the services and advice you can provide with and without a licence is currently being finalised. This will assist members to understand how the services currently provided will fit into the new framework.
Resources available for Certificate of Public Practice holders
A range of resources have also been developed for members who are Certificate of Public Practice holders and are considering applying for new limited Australian Financial Services Licence including:
- DIY Licensing Kit – this kit provides a step-by- step guide to obtaining a limited AFS licence including a Compliance Manual and a sample application for a limited AFS licence
- Limited Australian Financial Services licensing: Your obligations – this guide has been developed to help members understand their obligations of holding a limited AFS licence.
These resources will be emailed to members who have previously registered an interest in receiving these resources. If members have not already registered interest, email [email protected] – please confirm you are a Certificate of Public Practice holder and your membership number.
Further resources to be released
As stated these are an initial range of resources. Further resources are to be released, for example some disclosure documentation – Financial Services Guide and Statement of Advice templates.
What will the Institute do to assist members?
The Institute will be assisting members who wish to go through the licensing process with ASIC.
The Institute (jointly with CPA) has developed guidance and resources to assist members in considering their options for when the accountants’ exemption is removed from 1 July 2016.
These resources will be emailed to members who have previously registered an interest in receiving these resources. If members have not already registered interest, email [email protected] – please confirm you are a Certificate of Public Practice holder and your membership number.