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Accountants and Self Managed Superannuation Funds

Applies to Accountants (CPA, FCPA, ACA, CA, FCA etc)


What's new?

The growth of self managed superannuation funds (SMSF) has become a topic of regulatory interest due to the increase in the numbers of entities; over 47,500 were set up in 2007, and estimated funds of over $300 billion.

Government has expressed concern that individuals have been persuaded to set-up SMSFs without adequate advice including being made aware of alternatives, their ongoing responsibilities and costs involved. Government has commenced consultation with industry organisations and participants, and will continue to monitor developments in the sector.

How does this apply to you?

Accountants play an important role in this sector but are restricted from providing full advice unless they hold an Australian Financial Services Licence (AFS Licence).

Accountants are exempt from licencing as long as services are limited to setting-up a fund for a client or providing them with audit services. When doing so you must give your client a written warning that you are not licensed to provide the financial product advice and that they should consider taking advice from an AFS licensee before making a decision.

If you provide any form of financial advice, including the following, you are required to have an AFS Licence:

  • Recommending any superfund other than the SMSF
  • Preparing or reviewing an investment strategy for an SMSF or recommending any assets to invest in
  • Recommending closing a super fund or changing contribution level
  • Recommending that the client invests any other investment product or insurance product, for example shares or life insurance

The penalties for providing financial product advice without being appropriately licensed are a fine of $22,000, a two-year term of imprisonment, or both.

What can you do?

Accountants are increasingly applying for AFS Licences so that they can provide complete investment advice and hence a whole service to their clients. Alternatively, some accountants are working with an AFS Licence holder, such as a financial planner or broker, as an Authorised Representative under their AFS Licence.

What can Certainty Compliance do for you?

  • Liaise with you and help you decide if you do require an AFS Licence
  • Assist you obtain an AFS Licence or Authorised Representative arrangement
  • Provide an outsourced compliance service to ensure your ongoing compliance with AFS Licence or Authorised Representative obligations
  • Training your staff on the obligations and boundaries for operating within the licensing exemption.

Further information

Certainty Compliance would be pleased to discuss how AFS Licensing requirements affect your accounting practice. Please contact us at (02) 9238 8091 or enquiries@certaintycompliance.com.au