Speaking to Accountants Daily, FOS lead ombudsman, investments and advice, June Smith, said based on the dispute problem areas FOS has seen with financial advisers, the ombudsman has flagged five key areas where accountants should take extra care with their procedures.
The first is ensuring the client meets the basic legal requirements for becoming a member of an SMSF, checking they are over 18 and have been a resident of Australia for more than two years.
They need to consider the appropriateness of the SMSF for the client, assessing whether they have the time to understand the unique obligations that will be placed upon them.
Advisers also need to understand the objectives of the client, she said.
“For instance, does the client need to be able to control the allocation of pensions or distributions, or is there another unique reason why an SMSF may be more appropriate for a client, rather than an industry fund? Also, thinking about the downsides, would the costs of administrating that fund be unrealistic in the circumstances?” she said.
“The next top tip we have is compare: compare the SMSF with an existing superannuation fund that the client may be a member of because there does need to be a real benefit in the client moving to the SMSF over the existing fund, and that requires the adviser to turn their mind to a direct comparison between the features, costs and benefits of the fund.”
Ms Smith warned that accountants will first need to assess whether this is within the scope of their licence.
“If this is beyond the scope of the accountant’s authority, then they need to make sure they have referral arrangements in place,” she said.
“Our final tip is, if that advice requires a statement of advice, then make sure that the statement of advice is clear and in simple terms.”
The statement of advice should also describe to the client the consequences for them if they act on that advice.
“That’s our top five tips for accountants to focus on as they review and refine their procedures under the licensing framework,” Ms Smith said.
FOS now has 842 accountants as members under its external dispute resolution scheme, while Ms Smith reminded licensed accountants to ensure they have joined a scheme.