New Limited Australian Financial Services Licence (AFSL)

New Limited Australian Financial Services Licence (AFSL)

A new form of financial advice licence will allow accountants to become licensed and able to provide a much broader range of financial advice than they have previously been able to.

Licensees will be able to advise on self-managed superannuation funds (SMSF) and superannuation generally and also give “class of product advice” on basic deposit products, general and life insurance, securities, and simple managed investment schemes. This is financial advice where no specific recommendation of a particular product is made.

The consumer protection provisions of the Corporations Act, such as the best interests duty will be extended to the financial advice provided by accountants.

A streamlined transition period will be available for accountants between 1 July 2013 and 1 July 2016. Accountants registered with CPA Australia, the Institute of Chartered Accountants or the Institute of Public Accountants will not need to satisfy ASIC that they have the necessary experience to qualify for the licence. After 1 July 2016 all new applicants will be subject to ASIC’s requirements in this regard.

Applicants are however subject to ASIC’s existing training requirements to hold an AFSL and provide financial advice.

A compliance certificate regime will be introduced instead of annual audits for this type of licence and where no money is actually handled in connection with the financial advice.

SMSF auditor registration

A new SMSF auditor registration scheme will require auditors to meet the following requirements to be registered as an SMSF auditor:

  • hold a tertiary accounting qualification that includes an audit component or have successfully completed study in audit as part of a professional accounting body program
  • meet a fit and proper test
  • hold professional indemnity insurance
  • have 300 hours of SMSF audit experience in the three years prior to registration, subject to transitional arrangements and
  • pass a competency exam, subject to transitional arrangements.

Auditors will be able to apply for registration from 31 January 2013. All auditors must be registered with ASIC by 1 July 2013 to conduct SMSF audits after this time.

Auditors required to sit the competency exam will be able to do so from 1 July 2013 and will have until 30 June 2014 to complete the exam and become fully registered.

The competency exam will be developed by ASIC in consultation with industry.

Auditors who sign off 20 or more audits in the 12 month period prior to applying for registration will not be required to sit a competency exam to become registered as an SMSF auditor.

Current SMSF auditors who have signed off on an SMSF audit within a 12 month period will be exempt from the hours based experience requirement when registering.

Registered auditors will be required to meet ongoing professional obligations including:

  • undertaking a minimum amount of Continuing Professional Development (CPD) training (120 hours) every three years
  • complying with the Accounting Professional and Ethical Standards Board’s APES 110 – Code of Ethics for Professional Accountants.

Initial registration cost is $100 and annual statement costs are $50. Competency exam cost is $100.