Are accountants prepared for the new licensing regime?
Some accountants are more prepared than others. Some have only just heard of FoFA and others are way ahead of the curve and are licensed and even doing things such as the marketing already. Overall I would prefer it if more accountants were better prepared but I think there will be a big rush at the end.
Even though we are one year into a three year transition period, time flies and there are a lot of steps accountants have to go through in order to get a licence or even to make a decision on what to do. A big message for us from the beginning has been act sooner rather than later, in terms of timing, like when should they be doing all of this, we are saying act now, think about it and do something sooner rather than later.
What is the first thing accountants should do to prepare themselves?
Firstly, they have to make that decision about if they are going to stay in the advice space or get out. Once they’ve made the decision to stay in the space then they’ve got to make sure they’ve got the right education qualifications because currently some do and some don’t.
The first thing we always say to them is to go a get the education qualification. They have to do at least RG146 in the relevant areas where they want to give advice and they can’t do anything until they’ve got that – so that’s the first step.
What exactly are the different options for accountants?
Basically they have to decide if there staying in or getting out and if they are going to stay in then they have to decide which way they’re going to do it – they have got to see this as a business decision at the end of the day. If they’re not going to provide advice themselves then they have to decide about referring their client who want this type of advice – and if they are going to stay in the space, then they’ve got to decide how they’re going to do it. They must decide, are they going to become an authorised rep of an AFSL holder or are they going to apply to ASIC for a limited licence and then there are a whole lot of decisions they have to make within that.
Does the new licensing regime open accountants up to a new regulatory environment?
It does, very much so and I think that is part of the big problem. It does open them up to the Corporations Act. About 90 per cent or so of the Corporations Act will apply to them and that applies even with a limited licence. What we've been saying to government is that there is a disparity between the scope of advice they can give and the amount of compliance they will be subjected to but the law is what the law is, even though it’s under a bit of a cloud at the moment, but as far as the accountants are concerned, it’s not going to change. The proposed amendments are not going to change anything but yes they will very much have to be prepared for a whole new world of regulation.
Will the new regime open up accountants to greater litigation risks?
It definitely would and that’s why their professional indemnity (PI) insurance is going to go up quite a bit in some cases. They’ll have to have PI insurance to cover the licensing and the financial advice they are going to give. It will definitely do that and the compliance – they’re going to have to be pretty aware of what the compliance risks are and then have systems in place to comply with all those requirements and make sure they’ve got the right kind of PI in place something goes wrong.