Minister for Financial Services and Superannuation Bill Shorten today announced a new form of financial advice licence that will significantly increase the availability of financial advice for all Australians.
The new limited Australian Financial Services Licence (AFSL) is expected to see up to 10,000 accountants become licensed and able to provide a much broader range of financial advice than they were previously able to.
In addition to being able to advise on self-managed superannuation (SMSF) funds and superannuation generally, licence holders will be able to give "class of product advice" on basic deposit products, general and life insurance, securities, and simple managed investment schemes.
"This new licence will extend the consumer protection provisions of the Corporations Act, such as the best interests duty in the recently passed Future of Financial Advice reforms, to financial advice provided by accountants," Mr Shorten said.
Importantly, the new licence does not allow specific product recommendations but is designed to enable accountants and any financial advisers who may hold this licence to provide more strategic and low-cost forms of financial advice which will greatly assist Australians to manage their finances effectively.
This reform will also benefit thousands of small businesses by creating a significant opportunity for accountants and financial advisers who wish to grow and diversify their business.
Minister Shorten also announced a streamlined transition period that will be available for accountants between 1 July 2013 and 1 July 2016. These arrangements will make it easier for accountants to transition into the AFSL regime in recognition of their existing professional qualifications.
"This replacement to the current accountants' licensing exemption is a major step forward and will help to facilitate a significant expansion in the provision of financial advice to Australians," Mr Shorten said.
"As accountants begin operating within the AFSL regime, there will be more options for consumers to access low-cost financial advice on important issues including insurance and superannuation needs."
There will be public consultation on draft regulations to give effect to these measures in the second half of the year.
SMSF Auditor Registration
The Minister also announced today further details of SMSF auditor registration.
"SMSF audits are an important part of the regulation of the SMSF sector. Auditor registration will increase the assurance that can be placed in the SMSF audit by ensuring that SMSF auditors are competent to detect and report contraventions of the superannuation law," Mr Shorten said.
Auditors will need to meet the following requirements to be registered as an SMSF auditor:
- hold a tertiary accounting qualification that includes an audit component or have successfully completed study in audit as part of a professional accounting body program;
- meet a fit and proper test;
- hold professional indemnity insurance;
- have 300 hours of SMSF audit experience in the three years prior to registration, subject to transitional arrangements; and
- pass a competency exam, subject to transitional arrangements.
"SMSF auditor registration will improve the integrity of the rapidly growing SMSF sector and ensure that sector can continue to thrive," Mr Shorten said.
Auditors will be able to apply for registration from 31 January 2013. All auditors must be registered with ASIC by 1 July 2013 to conduct SMSF audits after this time. Auditors required to sit the competency exam will be able to do so from 1 July 2013 and will have until 30 June 2014 to complete the exam and become fully registered.
The competency exam will be developed by the Australian Securities and Investments Commission (ASIC) in consultation with industry.
Transitional arrangements for SMSF auditor registration
Transitional arrangements have been developed for existing SMSF approved auditors to give recognition to highly experienced, competent auditors. Auditors who sign off 20 or more audits in the 12 month period prior to applying for registration will not be required to sit a competency exam to become registered as an SMSF auditor.
Additionally, existing SMSF auditors who have signed off an SMSF audit within a 12 month period will be exempt from the hours based experience requirement when registering.
Ongoing requirements for registered SMSF auditors
Registered auditors will be required to meet ongoing professional obligations including:
- undertaking a minimum amount of Continuing Professional Development (CPD) training every three years;
- complying with the Accounting Professional and Ethical Standards Board's APES 110 – Code of Ethics for Professional Accountants.
23 June 2012