Government hesitant on accountants inclusion in financial advice

In the wake of the Quality of Advice Review (QAR), accounting bodies had lobbied the government calling for legislative changes to enable accountants to be able to provide certain types of strategic advice – including SMSF advice.

Historically, the accountants’ exemption of the Corporations Regulations 2001 permitted accountants without an Australian Financial Services Licence (AFSL) to advise on a client’s SMSF; however, as part of the Future of Financial Advice (FOFA) reforms, the accountants’ exemption was repealed and ceased to operate on 1 July 2016. From this date, accountants have only been able to continue to provide SMSF advice and related services if they are licensed to do so under an AFSL.

Earlier this year, the SMSF Association said it would continue to push for an alternative advice model for accountants despite the lack of traction on the issue in the QAR.

Namely, in response to mounting licensing and compliance costs, the SMSF Association and major accounting bodies last year suggested an alternative regulatory model, proposing an amendment to the Tax Agent Services Act 2009. The proposed solution would enable qualified accountants with a certificate of public practice and tax agent registration to offer straightforward strategic superannuation advice, provided they meet specified criteria, including SMSF specialist accreditation.

However, despite the push for change and a desire for an alternative advice model for accountants, the government remains hesitant to delve into this territory, leaving the discussion in a state of stagnation following the QAR.

Speaking at the Association of Independently Owned Financial Professionals’ (AIOFP) Canberra congress last week, Financial Services Minister Stephen Jones responded to questions regarding the possibility that the government could review its position on accountants.

Specifically, a member of the AIOFP asked the minister to consider reintegrating accountants into the financial advice space, emphasising that accountants pose no threat but rather offer a pathway for a new cohort of highly professional experts to contribute to the financial advice sector.

However, in a fairly short reply, one that acknowledged the lobby work of the accounting bodies, Mr Jones emphasised his focus on internal matters within the financial planning profession.

“We need to look at some of those other boundaries once I’ve got this job done,” the minister said.

The QAR final report cited research from Investment Trends which indicated that consumers are willing to look to a range of providers for financial advice, including financial advisers, their superannuation fund, accountants, and financial institutions.

However, QAR reviewer Michelle Levy did not recommend any changes to the advice accountants can give, despite suggesting that others – super funds, banks, and insurers – should have expanded advisory powers.

“I think there are sufficient exceptions and options that accountants and registered tax agents can choose from to adapt their business model as required, depending on what advice they want to provide to their clients,” Ms Levy said in the report.

Mr Jones appears to agree with Ms Levy, and the sentiment at the moment is to avoid hasty decisions and instead focus on a well-considered strategy for any potential changes.