Mark Halsey, managing partner at Halsey Legal Services told AccountantsDaily the introduction of the new licensing regime will significantly impact accounting practices who deal with SMSFs, opening them up to a whole new complaints process.
“Arguably the most significant change that accountants will experience is the way in which clients will be able to initiate and pursue complaints against SMSF practitioners,” he said.
While most accountants will have a reasonable understanding of client claims in the court system, according to Mr Halsey, this will not prepare the average accounting practice for dealing with an ASIC-approved external dispute resolution scheme (EDR scheme).
“The EDR schemes are the Financial Ombudsman Service Limited (FOS), and the Credit Ombudsman Service Limited (COSL) which can deal with SMSF complaints despite being referred to as the Credit Ombudsman Service.”
“It is an AFS licence condition that licensees whose practitioner/representatives provide financial services (including SMSF services) to retail clients be members of at least one EDR scheme. In this context, ASIC typically treats trustees of SMSFs as retail clients,” Mr Halsey said.
This unfortunate combination of “dispute resolution on the cheap” combined with the ability to aggregate claims into very large disputes and the absence of the right to appeal against defective decisions could make life much more difficult for accountants, according to Mr Halsey.
This has already had a very adverse impact on financial advisers and their professional indemnity insurance, he said.
“In fact, it has arguably led to financial advisers having some of the most expensive (and fastest increasing) professional indemnity insurance premiums in the country."
"There is concern about this flowing through to SMSF practitioners once they become subject to EDR schemes,” Mr Halsey said.