Why is ASIC making Accountants upskill towards RG146 Accreditation?

Most people are pretty clear that Accountants and Financial Planners provide different services (…in the most part). Accountants specialise in providing tax advice and managing their client’s tax obligations with the ATO. Financial Planners often provide advice in areas that include superannuation, investments, insurance and debt. Of course, there is definitely an overlap in the advice areas that Accountants and Financial Planners specialise in. That “overlap” is precisely what ASIC is attempting to address via regulation being introduced on July 1st 2016.

What is the Accountants’ exemption?

It’s probably no surprise to learn accountants sometimes help their clients with superannuation strategies to optimse their tax position including helping their clients establish Self Managed Superannuation Funds (SMSF’s). From 1st July 2016, ASIC will make it mandatory for Accountants to have specific education (called RG146) related to Superannuation advice and specifically the work they do in regard to SMSF’s, the fastest growing segment of the superannuation market. Did you know for example that there is over $500 billion in SMSF’s right now? Currently an exemption (known as the Accountant’s exemption) exists for Accountants whereby they do not require the education or license arrangements required by ASIC. This exemption expires on July 1st 2016.

What restrictions will impact Accountants after the Accountant exemption expires on 1 July 2016?

If Accountants do not have RG146 accreditation they:

  • Will not be able to give any advice relating to SMSF assets or investment strategy, including the acquisition or disposal of certain financial products or classes of financial products by trustees.
  • Will not be able to recommend whether clients dispose of interests in another type of superannuation fund (such as an employer fund or public offer fund), or any other type of financial product, even if the recommendation is for the client to dispose of that product in order to establish or join a SMSF (for example, by rolling over funds from the other superannuation fund to the SMSF).
  • Will not be able to recommend whether clients change investment strategies or contribution levels of another type of superannuation fund. That is, you won’t be able to recommend whether your client stops contributing to an existing superannuation fund and instead makes contributions into a SMSF.
  • Will not be able to give advice about switching between investment options.
  • Will not be able to recommend clients do not invest in other types of financial products.
  • Will not be able to recommend clients join an existing SMSF unless that recommendation is reasonably necessary to, and an integral part of, advice about the establishment, operation, structuring or valuation of the fund.

Will Accountants require a SMSF advice license after July 2016?

In short, many accountants will if they want to continue to provide advice in relation to SMSF’s – particularly establishing them. A license can be obtained via an Australian Financial Services Licensee (AFSL). The license can be a ‘full’ authorised representative license (“AR”) or a ‘limited’ AR license. The choice of whether to adopt a full AR or a limited AR license really depends on the business model accountants wish to pursue.

The limited AR option covers the provision of a limited range of advice in areas such as the establishment and wind up of SMSFs, general super contributions, strategic insurance advice and basic deposit products for super funds.

Accountants who choose to operate as a full AR on the other hand will be able to provide all of the SMSF accredited advice elements covered by the limited license IN ADDITION to specific advisory areas, such as investment advice, insurance advice, debt advice, gearing advice and overall holistic financial advice.

Call us on 1300 738 955 to find out more about our Accountants RG146 compliant SMSF package.