If you are an accountant providing advice to clients about their Self Managed Super Fund (SMSF) then you will have heard about the Limited Australian Financial Services Licence (AFSL) regime. If you haven’t already considered whether you will apply for a Limited AFSL, then now is the time to start.
What are the options?
There are two options for accountants who provide SMSF advice:
- Apply for your own Limited AFSL; or
- Become an authorised representative of another Limited AFSL holder.
There are benefits to both options. As a Limited AFSL holder you have independence, the ability to have total control over your practice, the advice you provide and your clients. With a Limited AFSL accountants can also provide class of product advice on a range of financial products.
Becoming an authorised representative is a quick and simple process and allows accountants to provide the same services as a Limited AFSL holder, subject to any restrictions placed on the authorised representative by their authorising licensee. Authorised representatives also receive compliance support from their authorising licensee allowing them to focus on the provision of advice. However, as an authorised representative, you lose your independence and may be subject to strict monitoring and supervision by the authorising licensee. There is also the risk that the authorising licensee’s philosophy and management procedures do not align with yours.
Applying for a Limited AFSL
When applying for your own 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 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 cashflow 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 with a clear and consistent story.
The soft deadline of 1 March 2016 to lodge your Limited AFSL application previously advised by ASIC to the industry has now passed so time is of the essence. The soft deadline was based on ASIC’s timeframe for the assessment of an application being 4 months. The preparation of the proof documents to be submitted to ASIC can be a time consuming process, especially if you have not engaged a specialist consultant to assist you. In light of the soft deadline given by ASIC having passed, we suggest all accountants consider their position and commence their application for a Limited AFSL immediately.
Alicia works across both Sophie Grace Pty Ltd and Sophie Grace Legal Pty Ltd with a particular focus on compliance and legal services. She manages the licensing and compliance aspects of the business. She is responsible for AFSL and ACL applications, variations and assists the compliance team in the implementation of compliance reviews. She provides ongoing compliance support and assists with the preparation of legal advice, commercial agreements and disclosure documents.