Accountants Exemption & Limited

Transcription

1 Licensing Ravi Verma Licensing Page 1

2 Agenda What is a Limited AFS License Scope of License Financial Product Advice & Class of Product Application Process Initial & Ongoing Requirements Fees Making the decision Licensing Page 2

3 What is a Limited AFS Licence? Existing Exemption advice SMSF - acquire or dispose of (an interest in) an SMSF removed 1 July 2016 Continue to advise obtain a licence new form AFS licence Limited Licence broader range than exemption allowed Allows accountants to provide financial product advice SMSFs existing Super holdings certain circumstances class of product advice deal in an interest in SMSF Licensing Page 3

4 Scope of Licence Financial services/products covered for with a limited licence? 3 Choices - Services Provide financial product advice Products Interest in SMSF includes Recommend & establish SMSF SMSF investment strategy Insurances Borrowings Super products existing holdings, but limited to extent required for Recommendation to establish SMSF Advice on contributions or pensions What is Financial Product Advice? recommendation/statement of opinion intention of influencing decision on financial product personal consideration to objectives, financial situation & needs Licensing Page 4

5 Scope of Licence Financial services/products covered for with a limited licence? You choose Services Products Class of product advice Super products Securities GI & Life Risk Basic deposit products Simple Managed Investment Schemes What is class of product advice? Financial product advice about class of products BUT does not involve specific product recommendation For example give recommendation about term deposit products BUT not specific recommendation about particular term deposit product offered by an institution Licensing Page 5

6 Scope of Licence Financial services/products covered for with a limited licence? You choose Services Products Arrange to deal in financial product Interest in SMSF Can arrange to deal on behalf of another, in an interest in an SMSF Doing the following, in relation to financial product: applying for acquiring varying issuing disposing Licensing Page 6

7 Let s look at some examples SMSF/Investments Advice Allowed under Limited Licence? Which Authorisation do I need? Advise client to set up SMSF Yes Provide financial product advice Help client set up SMSF Yes Deal in financial product Advise client to exit SMSF and roll funds into a pension product Advise client to consider buying shares through SMSF Advise client to buy Qantas shares Yes Yes No product specific advice Provide financial product advice Class of product advice - securities Arrange for client to buy Qantas shares (help them trade for purchase within SMSF) Advise client on type of shares (banking, mining, etc ) they should invest in No this is dealing or arranging to deal in relation to securities Yes Class of product advice - securities Advise on SMSF Strategy Yes Provide financial product advice Licensing Page 7

8 Let s look at some examples - Insurances Advice Allowed under Limited Licence? Which Authorisation do I need? Advise client on type of risk insurance they should have Advise client on death/disability options in existing super product e.g. client asks is this right type of cover for me? Advise client on how much life insurance they should have Advise client about underwriting process for a particular product Advise client to switch their insurance product to a different product Advise on whether to hold insurance directly or through SMSF Advise on certain classes of insurance for tax deductibility reasons Yes BUT NOT a specific product Yes you can provide factual advice or advice on type of cover included Yes No this is product specific advice No this is product specific advice Yes Yes Class of product advice life risk Provide financial product advice (this relates to the super product) Class of product advice life risk Class of product advice life risk Class of product advice life risk Licensing Page 8

9 Application Process Requirements to apply Comply with financial services law: General obligations provide financial services efficiently, honestly & fairly Conduct & disclosure obligations Best interest duty SOA, where required Comply with conditions on licence: Set out in licence certificate Pro Forma 209 AFSL conditions Licensing Page 9

10 Info required on application form Details for you & business with proofs Business description Selection of services/products you want to be authorised for Source of income & growth expectations Client demographic Service models & methods Organisational chart Responsible Managers Character, relevant experience, suitability, responsibility Qualifications, professional accreditations, credentials National criminal history check <12m Business references & experience requirements not required < 30 June 15 & recognised accountant Recognised accountant - Cert Public Practice by ICAA - Public Practice Cert by CPA or IPA Licensing Page 10

11 Info required on application form cont d Financial Statements Income, cash flow, balance sheet, cash flow projections How you will meet ongoing financial requirements Compensation & insurance arrangements PI meets requirements of AFSL Provide copy complete PI questionnaire Dispute resolution arrangements Internal Dispute Resolution (IDR) procedure External Dispute Resolution (EDR) procedure Membership of EDR approved by ASIC e.g. FOS Licensing Page 11

12 Guidance on application forms ASIC RG 1 AFS Licencing Kit Part 1, 2 & 3 Pro Forma 209 AFSL Licencing Conditions Sample application 3 rd Party Consultancy Licensee Licensing Page 12

13 Initial Requirements Applying before 1 July 2016 Training requirements for those providing advice to retail clients ASIC RG 146 Specialist knowledge areas to include Generic knowledge Financial planning Investments Super & SMSF Relevant industry qualification Kaplan Pinnacle Licensing Page 13

14 Ongoing Requirements Audit requirement do not need to lodge annual auditors report lodge annual compliance certificate Financials ASIC Form FS 70 profit & loss statement and balance sheet CPD Licensing Page 14

15 Cost of Licencing (in $) ASIC estimates initial cost of applying for license = Estimated cost of maintaining licence = this includes: Costs of ongoing training CPD requirements Technical support Compliance Lost revenue from time diverted from other fee generating activities SMSF Essentials article 28 0ctober 2013 The real cost of SMSF licensing for accountants Licensing Page 15

16 Fees approximates only (in $) Initial: ASIC App Fee 1600 Bankruptcy 50 Police 40 EDR 500 Training 1 person 3000 PI - estimate 6000 Total - rounded Ongoing: ASIC Lodgement Fees 600 EDR Membership 300 PI 6000 Ongoing training Total - rounded Licensing Page 16

17 SMSF Association Conference Feb 2015 Peter Kell (ASIC) Number of applications for limited license received by ASIC = 105 Number approved = 44 Balance are either in process of being assessed have been rejected withdrawn A number of applications did not meet the required standards. Why? Not completed the necessary RG146 requirements It could take up to 12 months to get licensed so delaying is not a real option Licensing Page 17

18 Options Licensing Page 18

19 Key Takeaway Points If you want to continue to be active in this area consider your options now look into costs to your business consider time constraints from your normal activities begin process of licencing seek support and guidance with experienced professional partner Licensing Page 19

20 If you have any questions about this presentation, please contact Ravi Verma at or on Licensing Page 20