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Why are ASIC rejecting Accountants’ AFSL applications? RG146 (Part 2)

In our previous article we explained why ASIC are continually rejecting accountants AFS License applications. Obtaining your license isn’t the end, it’s only the beginning.

Arriving into work on July 1st, looking a little worse for wear after the end of financial year office bash, you see a long term client and his wife. They have been discussing an SMSF with you for several years and are finally ready to commit.

You smile, tell them you won’t be long. You open your desk drawer pull out a couple of Berocca and wonder why they didn’t come in yesterday before the accountants’ exemption actually expired. Worst of all you realize it was your decision to delay their appointment because of the long planned party and it’s a Friday morning!

RG 146 training will not prepare you for client one. The fwgs training, specifically designed for accountants seeking to become authorised representative’s, aims to address this very issue.

If you have gone down the self-licensing path, even a limited license, you have carefully documented to ASIC precisely what you will do. That’s right, your firm paid $20,000 to a third party to complete an application and your PA supplied the information and all you did was sign it off.

You gave ASIC the following templates: SoA’s, FSG, Needs Analysis, Risk Profile, File Note and AML confirmation documents. Yes you did! And you told them you knew where to put them and when!!

Fwgs has developed an online portal that is simple and clear for its limited authorised representatives.

From the moment your PA makes the appointment through to your client signing off the Statement of Advice our intuitive system ensures you follow the compliance steps. Our limited authorised representatives will have nothing to fear when the accountants’ exemption expires because they will have a system, the templates and our support to provide an outstanding experience for their client.

Register your interest today to become a Limited Authorised Representative.

ASIC accountant exemption

Why are ASIC rejecting Accountants’ AFSL applications? RG146 (Part 1)

After the accountants’ exemption expires on 30 June 2016 accountants must be appropriately trained and authorised to continue to give SMSF advice – this we know. Over half of the AFSL applications have been rejected by ASIC – this we now know. Applying for an AFSL is complex – this you will discover if you chose this path.

The alternative, which is far less expensive upfront and ongoing, is joining finance wise as a limited authorised representative.

The reason ASIC are rejecting the proposals revolve around three key areas; the application, the core-proofs and the non-core proofs.

The application and supporting directions from ASIC are confusing and it will be difficult to document compliance and risk management systems. Remembering that many financial advisers have successfully obtained licenses perhaps their experience will assist. The most common solution is to appoint a third party with expertise to do it. This costs in the order of $20,000. So, if advisers who are in the system outsource the task maybe accountants should too.

In addition accountants applying for a license must supply core proofs. These proofs needs to follow a prescribed format. If the proofs are acceptable but the format is not the application will be rejected. The same applies for non-core proofs.

In short, without expertise to assist in the application process it is unlikely an application to manage the requirements after the accountants’ exemption expires will be successful. It will cost money and take time and that’s just the beginning. The costs alone to manage the license can be up to 5 times more than the application itself and accountants will also be directly responsible for client liability.

In our next article we will review what happens at 9.00am on July 1st when your first prospect is sitting in your waiting area.

Register your interest in becoming a Limited Authorised Representative of finance wise.

ASIC’s Advice for SMSFs RG 205

Anyone would think that ASIC had the accountants’ exemption expiry in mind with this timely offering!  The key points are:

Relevant Conduct and Disclosure Obligations

  • A reminder (or an informer) that LARs have a best interest duty (s961B, G and J).
  • A reminder to give clients an SoA before the clients act on advice.
  • All SoA’s covering SMSF’s must include switching advice.
  • Without appropriate consideration you will be in breach of your obligations.

Lack of Statutory Compensation

  • LARSs must advise clients that they will fall outside of the compensation framework available to investors in APRA funds. This means they will not be eligible for compensation if the SMSF suffers loss as a result of theft or fraud in an underlying investment.
  • Without appropriate consideration you will be in breach of your obligations.

Impact of Insurance

  • LARs are obligated to consider appropriate and affordable insurance and include this information in the SoA. ASIC warn of severe concerns if a client had cover prior to the establishment of an SMSF but not afterwards.
  • Without appropriate consideration you will be in breach of your obligations.

finance wise note: virtually no LAR is authorised to provide product advice so good luck with that one.

Access to Complaints Mechanisms

  • LARs are obligated to communicate the inability to access certain dispute mechanisms. ASIC warn of severe concerns if a client is uninformed.
  • Without appropriate consideration you will be in breach of your obligations.

The appropriateness of different SMSF structures

  • ASIC explain that will be greatly displeased where clients have been inadequately advised on SMSF structures.
  • Without appropriate consideration you will be in breach of your obligations.

Trustee obligations

  • ASIC are likely to look unfavourably on advice documents that exclude clear communication concerning trustees time, skills and obligations necessary to operate an SMSF.
  • If there is no consideration you will be in breach of your obligations.

Trustee obligations to develop an investment strategy

If the advice concerning a SMSF’s Investment Strategy is inappropriate given the members risk appetite and investment goals you will be in breach.

finance wise note: this topic is not covered in dfp 1 or dfp 2.

Additional information to be included in a SoA

  • A LAR needs to describe potential benefits that may be lost and other significant consequences of switching. This sounds similar to a previous area but ASIC are specifically interested in exit fees or other charges; loss of rights or benefits like insurances and compensation; loss of other opportunities ie discount health insurance or free financial advice; tax consequences; and anything else ..
  • Without appropriate consideration .. etc.

The finance wise Solution

Join our license as a LAR and this is all dealt with via our SoA template and prior to that our induction video and our practice integration process.

Register your interest in becoming a finance wise Limited Authorised Representative.