Harsh new super adviser restrictions
Under new rules in the Financial Services Reform Bill accountants may be liable for harsh penalties if they provide superannuation advice to clients without holding a financial services licence.
The new rules prohibit accountants from “recommending that a person take an allocated pension or other income stream over a lump sum without being licensed”. However, an accountant is able to provide factual information detailing the taxation of lump sum benefits and allocated pensions, as long as they do not recommend which to use.
Chartered accountancy firm William Buck director Anna Carrabs believes the law is over reaching itself in this area and creates unnecessary questions about the credibility of accountants.
“This new rule is unfair on accountants, who are often asked by their clients for simple advice about allocated pensions and other retirement income options,” she said.
According to Carrabs, accountants will now have to invest their time and funds to acquire a financial adviser’s licence or form an independent association with a financial adviser.
And forming an independent association “is not a preferred option for many accountants, as they may not know or have a financial adviser nearby who can service their clients”, she said.
The bill summarises that advice can be given by a tax agent if its in the ordinary course of activities as a tax agent, such as analysis of tax implications of segregated or unsegregated assets and explanations of the tax requirements of a pension. But the accountant cannot provide advice in relation to specific investments in the fund.
Also, under regulation 7.1.29(5)(a) accountants are allowed to provide advice on a self-managed super fund (SMSF) in relation to restructuring the compilation of member accounts on retirement, provided the person advised is a trustee, director of the trustee, or a person who controls management.
Recommended for you
ETF provider VanEck has announced its intention to launch a uranium and energy solution as global political agendas point to expansion in this sector.
PIMCO has announced the launch of a new active fixed-income ETF, marking its fifth active solution on the Australian market after the launch of four ETFs earlier in the year.
With the Australian advice market being a target for US private equity firms, a US advice commentator has shared lessons from his overseas experience, and why PE may be less attractive than initially expected.
Financial advisers are reminded to ensure their CPD is up to date with the Financial Services and Credit Panel making its second determination in a week after an adviser failed to meet the requirements.
