A new class of Australian Financial Services License (AFSL) will be introduced so accountants and other advisers can continue to provide limited-scope financial advice, including insurance advice, to their clients.
Announcing the new licensing arrangement, Minister for Financial Services and Superannuation, Bill Shorten, said it would significantly increase the availability of financial advice for all Australians.
Holders of the new licence will be authorised to provide financial advice on self-managed superannuation funds (SMSF) and class of product advice on:
- Life and general insurance
- Superannuation products
- Simple managed investment schemes
- Securities
- Basic deposit products
Class of product advice is defined as financial advice that does not make a recommendation about a specific financial product. In the case of insurance, the Government provided the following example of the type of advice licence holders would be able to provide:
…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…
… the new licence will be available to all advice providers, including financial planners
Importantly, the new licence will be available to all advice providers, including financial planners. The Government has also advised that the Future of Financial Advice (FoFA) regulations, including the best interests duty, will apply to the new licence.
Consultation on the draft regulations to give effect to the new licensing measures is expected to occur in the second half of this year.
Industry response to arrangements
The financial services industry has responded positively to the new licensing arrangements.
The Financial Planning Association (FPA) said the change from the current exemption arrangements was a positive one, which would level the advice playing field.
“The FPA has long advocated for the removal of the accountants’ exemption. The announcement by the Minister is a welcome affirmation of that position,” said FPA CEO, Mark Rantall. “We expect the proposed conditional license measures will remove inherent risk and uncertainty – and encourage greater industry competition – by evening up the disjointed playing field that is part of the current regime.”
The Chartered Practicing Accountants (CPA) and Institute of Chartered Accountants (ICAA) issued a joint statement saying the new licence would provide the more than nine million Australians who use the services of a professional accountant with access to financial advice.
This final element of the FoFA reforms reflects the prominent role professional accountants play in the provision of financial advice…
According to CPA Australia CEO, Alex Malley, for many Australians their professional accountant is their only source of trusted financial advice.
“The objective of FoFA reforms was to make financial advice more accessible and affordable for the Australian public. This final element of the FoFA reforms reflects the prominent role professional accountants play in the provision of financial advice, and will go a long way towards achieving the objectives of broadening access to financial advice across the community,” he said.
MLC and AMP, who both offer advice support services for accountants, have also expressed their support for the new licence.
I wonder if this will alter arrangements with risk adviser who might hold a cross-referral agreement with an accountant.
Not convinced Bill Shorten has our (life-risk advisers) best interests at heart any more than he purports to have for the public.
Whats changed? in my experience, contrary to what they were previously legally permitted to do accountants have provided advice to their clients on these matters since time began! Most people take accountants advice for gospel regardless of how accurate and factual it actually is! Just look at the undiversified Great Southern and Timbercorp mess a lot of accountants put their clients in. From what I hear from clients regarding risk advice some accountants provide I hope they need to do SOAs and have good PI as they will get the pants sued off them if clients follow their risk advice!
What a CROC these guys cant even tell the time of the day. The FPA is happy because it gets more members. However Im a planner today looking for advice on a TAX FREE COMPONENT and whilst the 4 accountants CPA,S all acknowledge what it is they dont know how to work it out or how to get the formula.
An Edwards Marshall partner told me that a 31 year old next birthday does not need to contirbute to super as it is invested for 30 3 years for her.
No dont give them an AFSL unless they get an Adv Dip in the area they wish to give advise we3ll done to the CPA for batting for its members what have you done FPA?
Is anybody else confussed as to how this is going to be an improvement for the clients? It certainly wont be an improvment for the clients advisers as the first time the ball is dropped there will a flurry of finger pointing and phone calls to PI insurers. Again I ask how is this going to benefit the clients?
How is an accountant a “trusted “financial adviser ? I find that many (not all ) accountants are quite at sea when it comes to matters other than tax.
and even then they dont get it right.
another Bill Shorten effort to get rid of us
Oh dear. Stand by for flippant comments ( “gee, your IP is expensive” OR “I think you only need a 2 or 5 year benefit period ” OR ” Indemnity saves premium ” OR ” Look at my wonderful work reducing your taxable income with my minimization strategies ” OR why don’t you save money and buy your insurance from one of those TV adverts ” And then there are all those estate planning stuff-ups we see every day because accountants create time bombs by advising clients with complex familial histories to put life cover in super ” for tax efficiency ”
LOL. Shorten is a cretin, pure and simple. Letting these so-called professionals give throw-away advice on something as legally complex as an IP policy is high farce.
One things for sure – accountants PI will be on the way up once the PI insurers work out their increased exposure
As to the FPA supporting the move – enough said !
And yes, some of them have doing this illegally up to now, but NOW its open slather. And the FSC is worried now about “churning” ? You ain’t seen nothing yet !
Since when di Bill Shorten care about anyone but Bill Shorten. He has no idea and runs around championing himslef on helping the consumer when really he exposing them to even more risk! This legislation will provide more avenues for the shonks to get in, charge like wounded bulls and then run when the boat sinks. Accountants and solicitors have been doing it for years by getting NIL advice forms signed. Hurry up with the election and lets throw this a/hole out the door where he belongs. he clearly has an ego agenda and will cripple this industry if he stays much longer.
I cant wait to belay all resposibility onto any accountant that thinks they “know better”. I’ll be documenting at every turn “as professionally advised by client’s all knowing…. Joe Accountant”.
Glad to see the accountants will now not be shielded from all the ASIC red tape bs.
I work with accountants. Just the other day one of the senior accountants stated he does not believe in income protection, just profit…….
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