Changes to SMSF advice
07/07/16 17:31 Filed in: Superannuation
From the 1st of July 2016 a Self Managed Super Fund is deemed to be a ‘financial product’. Consequently any advice related to SMSFs is financial product advice and is governed by the Financial Services Act, which is regulated by ASIC. The upshot is that accountants no longer can provide advice the way we used to with regards to SMSFs. For all advice (which includes ‘information that could be considered to be advice’) the same process must be adhered to as with any other financial planning advice: a separate licence is required, we’ll need to compile a fact finder, including a risk profile, prepare a Statement of Advice, have this signed by the client and so on.
As you will appreciate, this additional mountain of compliance paperwork, plus the requirement to maintain an additional licence (annual fees, audit, PI Insurance) adds to the cost. What previously could simply be ‘advised and implemented’ will now require the whole process, which is enormously time consuming. With ASIC on the prowl to ‘make an example of accountants’ you’ll understand we will have to be extremely cautious not to break the law.
We still can and will administer super funds the way we always did, but advice e.g. on starting, changing or ceasing a pension, on the best level of contributions, on a general investment strategy (“should I buy my rooms in my super fund?”) and so on, all fall within the scope of ‘financial advice’ and will have to go through the formal process – and we will have to charge accordingly.
Importantly: also any ‘advice’ in relation to the establishment of an SMSF is financial advice and requires the full suite of advice related compliance documentation. Sadly, this will increase the costs of setting up an SMSF.