What is the Accountants' exemption?

The introduction of the Financial Services Regime in 2002 significantly changed the environment in which accountants operate within their practice in terms of the advice that they could provide. The provision of personal financial product advice requires, under Chapter 7 of the Corporations Act, all persons who carry on a financial services business in Australia to have an Australian financial services licence (AFS licence)or to be appointed as an authorised representative. Without this an accountant cannot provide financial advice to retail clients – exceptions to this requirement apply (Regulation 7.1.29 Corporations Act).

One of these exceptions includes the existing ‘accountants’ exemption’. The 'accountants' exemption' under regulation 7.1.29A of the Corporations Regulations 2001 permits accountants to provide advice on the establishment of self-managed superannuation funds (SMSF), without the need for an AFS licence.

As part of the FOFA reforms, the Government announced on 23 June 2012 that this exemption would be removed and that a new regulatory framework would be put in place. The new regulatory framework will apply to recognised accountants wanting to provide non-product strategic financial advice and advice on the establishment of SMSFs to their clients. (A recognised accountant is a person who holds a practising certificate issued by The Institute of Chartered Accountants in Australia, CPA Australia Ltd, or the Institute of Public Accountants.)

The announcement outlined the structure of a new conditional Australian Financial Services License (AFSL) that applies from 1 July 2013, with a three year transition period through to the end on 30 June 2016. The accountants’ exemption continues in its current form until 30 June 2016.

Accountants and other advisers seeking this new conditional AFS licence are able to apply for authorisations to provide financial advice on SMSFs and class of product advice on: 

  • superannuation products; 
  • securities; 
  • simple managed investment schemes as defined in the Corporations Regulations 2001; 
  • general and life insurance; and 
  • basic deposit products.

While anyone will be able to apply for this conditional AFSL, streamlining arrangements will be put in place to facilitate the transition for recognised accountants. These streamlining arrangements will simplify the process of obtaining an AFSL, for example removing the need for ASIC to consider whether each individual accountant has the necessary relevant experience to apply for an AFSL.

From 1 July 2016, accountants wanting to provide any financial advice, including advice relating to SMSFs will need to hold an AFSL or operate under an AFSL.

As many of you would be aware the regulations for the replacement of the ‘accountants’ exemption’ has now been finalised and ASIC has provided some guidance on ‘Applying for a limited AFS Licence’.

The Institute in conjunction with CPA Australia, has released the first of a range of resources to assist members in considering their options for when the ‘accountants’ exemption’ is removed from 1 July 2016.

The first of these is an Information Guide on the reform and a guide for members considering selecting an Australian Financial Services Licensee. We recommend members read this guide first.

The Information guide: Accountants’ exemption reform has been developed to:

  • Provide an overview of the reform
  • Outline the options to address the reform
  • Provide an overview of the new limited licence
  • Provide an overview of the resources that will be provided to members.

One of the options available for members is operating under another entity’s Australian Financial Services (AFS) Licence. We have developed a table of issues you may want to consider when selecting an AFS licence - Considerations when selecting an Australian Financial Services (AFS) Licensee.

Resources available for Certificate of Public Practice holders

A range of resources have also been developed for members who are Certificate of Public Practice holders and are considering applying for new limited Australian Financial Services Licence.

  • Limited Australian Financial Services licensing: Your obligations - this guide has been developed to help members understand their obligations of holding a limited AFS licence.
  • DIY Licensing Kit - this kit provides a step-by- step guide to obtaining a limited AFS licence including a Compliance Manual and a sample application for a limited AFS licence.

These resources will be emailed to members who have previously registered an interest in receiving these resources. If members have not already registered interest, email financial.services@charteredaccountants.com.au – please confirm you are a Certificate of Public Practice holder and your membership number.

Further resources to be released

As stated these are an initial range of resources. Further resources are to be released, for example some disclosure documentation - Financial Services Guide and Statement of Advice templates.

Please note however that the accountants’ exemption continues in its current form until 30 June 2016 and therefore there is still some time to make an informed decision and attain relevant training.

Further detail in relation to this proposed regime can be found in the Minister Bill Shorten’s media release ‘New form of licence expands access to financial advice’, Treasury’s exposure draft - accountants' exemption replacement regulationsASIC’s Information Sheet 179 - Applying for a limited AFS licence (INFO 179) and the Institute’s ‘Accountants' exemption announcement’.

Article last updated 12 March 2015