Limited licence, big bucks for accountants

Licence: Accountants will be able to be a one-stop shop Louie Douvis

The accounting lobby finally got its way. Accountants can now give the 9 million Australians they deal with each year a broader range of financial advice.

The change, which is designed to make financial advice more affordable and accessible, is expected to result in 10,000 accountants getting a “limited” rather than full licence and comes after two years of tense negotiations.

For accountants, this means huge opportunities to move into a space they’ve been dabbling in for years but in which they have been restricted.

Until now, accountants have been able to give general structural advice on self-managed superannuation funds as part of the long-existing accountants’ exemption. It’s been a big revenue generator for accounting firms, which are logically seen by their clients as the advisers best placed to give them such advice.

But the scrapping of the exemption was flagged as part of the Future of Financial Advice reforms. Accountants would have had to team up with a licensed financial adviser, obtain their own licence or become an authorised representative of a licensee to continue giving advice on setting up SMSFs.

The threat alone was enough to prompt the two largest accounting bodies – CPA Australia and the Institute of Chartered Accountants in Australia – into action. The two groups, which between them have about 180,000 practising members, mounted a public campaign (including full-page newspaper advertisements directed at Minister for Financial Services and Superannuation Bill Shorten) fighting any changes that would see advice that accountants can give watered down.

Shorten obviously wasn’t prepared to risk the votes of thousands of accountants. He also needed to deliver on the government’s pledge to make financial advice more affordable.

So he’s announced that from July 1 next year, accountants who hold a public practice certificate from one of the three professional accounting bodies (CPA Australia, the Institute of Chartered Accountants in Australia and the Institute of Public Accountants) can obtain a limited licence. This will cost less and be less onerous to obtain than a full licence and accountants will not be subject to the strict licensing requirements applying to financial planners.

The only catch is that the accountants can’t give product-specific advice. To do that, they will have to get a full licence.

Even so, the limited licence gives quite a bit of scope to advise on broader matters such as basic deposit products, general and life insurance, securities and simple managed investment schemes.

But after July 1, 2016, accountants wanting a full licence will be required to satisfy the same experience requirements as everyone else. Whether accountants will be prepared to take on full qualifications in 2016 remains to be seen.

It will also be interesting to see how the Australian Securities and Investments Commission, which has recently been cracking down on financial planners, will navigate this space over the next few years and how it will catch and prosecute accountants who go beyond giving non-product advice.

Financial Planning Association chief executive Mark Rantall says the three-year transition to getting a full licence is a “sensible time frame for accountants to undergo appropriate training”.

In the meantime, they can keep on generating big bucks just by getting a limited licence. The details of what the limited licensing process involves and how much it will cost will be announced by ASIC in the next few months.

Rantall says that of their 8000 financial planning practitioner members, about 15 per cent are also accountants. He says there has been a rise in the setting up of partnerships or link-ups between the two professions over the years and that the change won’t affect them working together in future.

“This provides a level playing field,” he says. “It’s not just accountants that can apply for the limited licence. Financial planners can apply too, if they just want to give strategic advice.”

But the Institute of Chartered Accountants general manager of leadership and quality, Yasser El-Ansary, says accountants won’t feel under pressure to forge relationships with financial planners.

“My expectation is there will be less inclination to partner up with financial dealer groups,” he says. “The accountant will be able to be a one-stop shop.”

He says this will be a new business opportunity for many. “It will help them expand and grow their existing fee for service base,” he says. “ It gives them the opportunity to market their capacity to provide non-product specific strategic financial advice; until now they weren’t able to do that until they got a full AFSL, which is a lengthy and complex process.”

CPA Australia chief executive Alex Malley says that “for many Australians, their professional accountant is their only source of trusted financial advice” and the change will broaden access to financial advice.

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