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ASIC’s concerns with Accountants

By: Jeff Mazzini| Tags:

Miranda Brownlee

While the implementation of the limited AFSL regime for accountants is still in its early stages, ASIC has discovered a number of “concerning” trends emerging from the application process.

Speaking at a CPA Australia conference in Sydney, ASIC Commissioner Greg Tanzer said one of these trends was “inadequate or no evidence of RG146 training course completion for all or some of the financial products sought under the application”.

Mr Tanzer said inadequate coverage of professional indemnity insurance, limited or no knowledge of the restricted scope of the ‘class of product’ advice authorisation and financial statements lodged in the name of a trust and not the entity or individual applicant, were other issues identified by ASIC.

The ASIC licensing team has now received 62 applications for a limited AFS licence, with 27 applications approved and two applications offered draft limited AFS licences subject to the provision of documentation and information.

Mr Tanzer said one application is likely to be refused on the grounds that the applicant failed to submit the prescribed documents and 25 applications have either been withdrawn by the applicant or returned to the applicant due to the application being materially deficient in respect of the documentation and information submitted.

However, financial services lawyer Sophie Gerber, director of Sophie Grace Compliance, told InvestorDaily’s sister publication ifa recently that her firm has “seen a marked increase in the number of accountants preparing for the new accountant’s AFSL as well as full AFSLs”.

Mr Tanzer said ASIC has amended and strengthened some of the key points in Information Sheet 179 Applying for a limited AFS licence.

“Our guidance provides an overview of the relevant steps in applying for a limited AFS licence, as well as explaining how existing ASIC guidance will apply,” he said.

Mr Tanzer said ASIC has had recent discussions with accountants and understands they want additional guidance on what activities do not need a licence.

“We are looking at putting together another information sheet in an attempt to answer those questions,” he said.

Mr Tanzer said it is important to note that apart from the annual compliance certificate, holders of the limited AFS licence will need to meet the same ongoing requirements as other AFS licensees.

“This includes all other licensing conduct and advice requirements to which financial advisers are subject, such as providing clients with a statement of advice where required, as well as membership of an external dispute resolution scheme and compliance with the FOFA measures.”

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