SMSFA calls for phase-out of limited licensing

The SMSF Association has called for the phasing out of the limited licensing system for accountants, saying it forces SMSF clients to pay fees that are significantly out of proportion to the complexity of advice being provided.

SMSFA chief executive John Maroney said the association had called to scrap limited licensing in its 2020 budget submission, as the system was preventing SMSF trustees from getting basic SMSF advice at a reasonable cost.

“If an SMSF trustee wants to seek advice regarding the establishment of a pension from their accountant, unlicensed accountants are unable to provide this simple advice,” Mr Maroney said.

“Licensed advisers can provide this simple advice, but it involves costly documentation disproportionate to the advice sought.”

He added that the SMSFA would be pushing for reform in the advice space that “reduces complexity, improves efficiency and drives harmonisation to better enable the provision of affordable, accessible and quality advice to business[es] and consumers”.

The association’s submission suggests the abolishment of limited licensing in favour of “a new consumer-centric framework that raises advice standards and rectifies the advice gap to allow appropriately qualified SMSF advisers to provide low-cost, simple advice”.

“The desired policy outcomes from introducing limited licensing have not been achieved,” the SMSFA’s submission said.

“Individuals have unmet needs, advisers face high regulatory costs and accountants are strangled by regulation. What we’re proposing is a new consumer-centric advice framework, with improved SMSF advice a critical element of this project.”

In addition, the association’s submission called for advisers to be given access to their clients’ tax information on the ATO’s online services.

“Currently, only registered tax agents (typically accountants) are able to access [the ATO’s] portal to get total superannuation balance and transfer balance cap information that is crucial for SMSF advice,” the SMSFA said.

“Ironically, these individuals are generally not able to provide SMSF advice as they are not licensed with ASIC. Incongruously, those licensed advisers who can provide SMSF advice (such as financial advisers) have no reasonable way of sourcing ATO portal information directly from the ATO as they are not, generally, the member’s personal tax agent.

“The move to open data and increased access to the ATO portal is an essential step for the $750 billion SMSF industry and the only means by which the sector can institute commercially viable operational surveillance to the standard the ATO rightly requires, and we encourage the government to make this an ATO priority project.”

Source: SMSF Adviser