The tightening up of regulations covering financial advice has made it hard for trustees of self-managed super funds to get basic advice about their SMSFs.
The SMSF Association has called for a review of the regulatory structure of SMSF advice to resolve the way basic SMSF services fit into the regulatory framework for accountants and financial advisers.
Under the current regulatory system SMSF trustees who want basic SMSF advice are either required to seek formal financial advice from a licensed adviser or make decisions without advice, the SMSFA says.
A licensing exemption that applied to accountants, allowing them to advise on setting up or winding up an SMSF, was repealed in 2016. Since then an accountant, or any individual, cannot make recommendations dealing with an SMSF without the appropriate licence.
The SMSFA says that if trustees are unwilling to pay for the cost of formal advice, there will be important unmet SMSF advice needs in the market.
The Association has included recommendations on this issue in its submission to the independent review of the effectiveness of the Tax Practitioners Board. However, it argues that a broader inquiry is warranted, with input from the Australian Securities and Investments Commission and the Financial Adviser Standards and Ethics Authority.
SMSFA chief executive John Maroney says: “We are not advocating a return to the accountants’ exemption. The outcome should improve consumer protection, ensure unscrupulous advice is prohibited and allow consumers to receive basic SMSF advice efficiently.”
Accountants can apply for a licence to provide a limited range of financial services relevant to SMSFs. And there are exemptions, which apply if the advice is part of another type of service typically provided by the accountant.
Maroney says the ASIC exemptions available to accountants are complex, unclear and do not provide protection to consumers for whom an SMSF is inappropriate or those seeking simple advice.
“From our perspective, the outcomes from introducing limited licensing have not achieved their policy intent. Individuals have unmet needs, advisers face high regulatory costs and accountants are strangled by regulation,” Maroney says.