The Financial Ombudsman Service’s (FOS) annual review shows only four disputes about accountants were accepted last year, compared to 524 for financial planners.
Disputes spiked by 16 per cent overall, with the lion’s share directed at banks with 10,464 accepted disputes and general insurers at 7,718.
It’s important to note that only accountants operating under the AFSL regime are captured in this data. Still, the low dispute figures are consistent with the observations of professional indemnity insurance brokers and compliance lawyers, which you can read about in detail here.
However, accountants should be on alert for their involvement in SMSF-related advice, FOS’ Dr June Smith told Accountants Daily, with problematic trends in SMSF establishment and using an SMSF to purchase property emerging.
The FOS is seeing that property is increasingly becoming a primary motivator for establishing an SMSF, meaning finer points about the suitability of an SMSF – such as the trustees’ capacity to manage their own superannuation – are treated as peripheral.
Accountants should be aware about their involvement in this kind of advice, given its potential to leave clients disgruntled or suffering losses where the SMSF was not appropriate for their circumstances.
Ms Smith noted that investors who established SMSFs to purchase property in Western Australia have found themselves in hot water, with a property market downturn leaving them unable to service their loan arrangements and keep up with the costs of an SMSF.
Where SMSF property advice can be particularly problematic is also in one-stop shop type arrangements, where professionals involved in the transaction and purchase for the client are linked via referral arrangement. Accountants involved in these networks should be cautious of their involvement and exposure to liability here.