The existing exemption, under regulation 7.1.29A of the Corporations Regulations 2001, allows “recognised accountants” (as defined under the regulations) to give SMSF advice without holding an AFS licence. However, the exemption will be repealed on 1 July 2016 as part of the Future of Financial Advice (FOFA) reforms. A new form of AFS licence referred to as the 'limited' AFS licence has been created for recognised accountants.
Any suitable entity will be able to obtain a limited AFSL but the government has given recognised accountants a three year transitional period, between 1 July 2013 and 30 June 2016, where they can take advantage of the transitional arrangements for entry into the AFS licensing system.
Those holding a limited AFSL are not required to lodge an annual auditor's report and can instead lodge an annual compliance certificate. However, they must still comply with the relevant requirements in the Corporations Act 2001. This includes meeting the conduct and disclosure obligations and their licensing conditions.
Regulations 7.6.01BA(3), 7.6.04(3), 7.8.12A(4) and 7.8.14B(3) of the Corporations Regulations 2001, define limited financial services as the following financial services:
You should be aware that the authorisations relating to the limited AFS licence do not appear to clearly authorise certain activities. At this stage, a number of issues appear to remain unclear. For example:
During the transitional period, AFSL applicants whose responsible managers are recognised accountants will benefit from a different organisational competence requirement. Under regulation 7.6.01BA(2), recognised accountants are only required to satisfy the knowledge requirements in RG 105 and are not required to demonstrate experience. However, licensees who opt to enter into this arrangement will need to comply with an additional condition requiring that, within three years of the licence being granted, they may be required to demonstrate to ASIC that they have:
When considering whether to obtain a limited AFS licence or full AFS licence, you should consider:
Please see our article in the Taxation in Australia Journal.
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