Accountants – Limited AFSL for Financial Advice

Accounting

Accountants must obtain a Limited Australian Financial Services Licence (AFSL) to provide financial advice on SMSFs and a class of product advice in relation to selected other financial products.

Types of Services you can Provide

Accountants holding a Limited AFSL are able to make recommendations in relation to a client’s existing superannuation fund to the extent needed when making a recommendation to establish an SMSF or when providing advice to clients on contributions and pensions. Accountants will also be able to assist a client to establish or wind up an SMSF.

Examples of the types of advice accountants can provide under a Limited AFSL include:

  • Advice on the sorts of life insurance cover that would be appropriate for a client in light of their circumstances and whether they should hold the cover directly or through a superannuation fund;
  • Advice on which simple managed investment scheme would be appropriate for and in the best interests of a client such as cash funds versus equity funds;
  • Advice on whether shares are an appropriate investment option given a client’s relevant circumstances including their tolerance for risk and whether alternative classes of products might be more suitable; and
  • Advice on the types of basic deposit products that would be appropriate for and in the best interests of a client saving for a home deposit such as term deposits, online savings accounts, or first home saver accounts.

Applying for a Limited AFSL

When applying for a Limited AFSL, it is important to:

  • Ensure you have the right Responsible Manager(s) – your Responsible Manager will need to be an accountant who holds a relevant practicing certificate and has RG146 qualifications in all financial products in which you intend to provide advice;
  • Know exactly what authorisations you need for the type of business you want to operate – apart from advising on SMSFs, will you also provide class of product advice in relation to other products? Think about the possibilities for business growth in the future as well as the advice currently provided to clients;
  • Be adequately capitalised or ready to be so when ASIC requests proof – an up-to-date balance sheet is required to be submitted to ASIC as part of the application;
  • Prepare your cash flow projections and profit and loss statement (good business practice regardless of an AFSL application); and
  • Make sure your proof documents align so that you present ASIC a clear and consistent story.

Help to obtain your Limited AFSL

Sophie Grace has compiled an AFSL Application Starter Pack for Limited AFSLs available for immediate download upon purchase. Our licensing starter packs are designed to guide you through the application process. It includes all Core Proof templates plus three Additional Proof templates required for submission to ASIC.

Some of the documents required by ASIC as part of an application for a Limited AFSL include:

  • A5 Business Description;
  • B1 Table of Organisational Competency for each Responsible Manager;
  • Copies of all qualifications, including course transcripts and certificates, held by Responsible Managers;
  • Evidence that all Responsible Managers hold a relevant accountant’s practicing certificate;
  • Financial Resources Statements including a current balance sheet, cash flow projections, and profit and loss statements;
  • Professional Indemnity Insurance certificate;
  • Australian Financial Complaints Authority membership certificate; and
  • Confirmation from the applicant that it will not hold client money.

Alternatively, Sophie Grace can work closely with you throughout the application process from preparing ASIC’s required documentation to application submission. Please contact us for an obligation-free consultation and quote.

Training Requirements

Accountants will need to meet ASIC’s existing training requirements under Regulatory Guide 105 to hold a Limited AFSL and provide class of product advice. This will ensure only accountants with appropriate skills and knowledge are authorised to provide financial advice under the Limited AFSL. Additionally, your Responsible Manager needs to have completed an RG146 qualification in the products you wish to provide class of product advice in such as SMSFs, superannuation, and securities.

Ongoing Compliance Obligations

Accountants operating within the AFSL regime are subject to all other licensing, conduct, and advice requirements to which financial advice providers are subject. This includes the best interests duty and membership with the Australian Financial Complaints Authority (AFCA).

Limited AFSL holders who do not handle any client money in connection with the provision of financial advice will be able to lodge a compliance certificate to ASIC each year. This is considered a reduced audit requirement as opposed to full AFSL holders helping to minimise the regulatory costs of operating within the AFSL regime.

It is also important to note that Limited AFSL holders must hold PI insurance to cover the provision of financial advice in accordance with Regulatory Guide 126. Disclosure requirements contained in the Corporations Act will also apply including the obligation to provide clients with a Financial Services Guide (FSG), a Statement of Advice (SOA), and a Fee Disclosure Statement (FDS) where there is an ongoing fee arrangement with the client.

If you would like further information or assistance regarding Limited AFSLs, please contact Sophie Grace directly.

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