The return of the accountants exemption is the first step to fixing the broken SMSF advice process, while the government and regulators should also consider simplifying the production of SOAs and creating a separate SMSF adviser profession with its own compliance requirements, according to BGL.
The software provider’s managing director, Ron Lesh, told SMSF Adviser that Chartered Accountants Australia and New Zealand and CPA Australia had been wrong in their submissions to Treasury that returning the exemption would not be enough to address unmet advice needs among SMSF trustees.
“What they should have done is said we support what’s being proposed and we would also like to see the following, but instead they have said we don’t support it at all,” Mr Lesh said.
“They haven’t asked members, and that is what I see is the problem; ask any member in a small firm whether the exemption should come back and the answer would have been yes.
“It’s not going to solve the whole problem, but it’s certainly an improvement on what we’ve got — you’ve got to start somewhere.”
Mr Lesh said the willingness of Treasury and regulators to consider a return of the exemption indicated an industry-wide acceptance that the current regime wasn’t functioning as it should, and that further steps should also be taken to improve quality and access to SMSF advice.
“Every time ASIC does its shadow-shopping, it finds SMSF advice is crap, and accountants agree it is not working,” he said.
“ASIC has not come out and jumped up and down and said [returning the exemption] is a bad idea, and they would have if they didn’t think it was, so their view is clearly that SMSF advice isn’t working.
“The way I look at it is the first stage is getting the exemption back and allowing accountants to talk about what they should be talking about, and once we’ve done that, we need to get trustees better investment advice.”
Mr Lesh said in addition to reinstating the exemption, the SOA process needed an overhaul to make investment advice affordable and appealing for SMSF trustees, given that 80 per cent of self-managed funds currently did not use a financial planner.
“The research we’ve done about that is that the whole SOA process, having to produce a 40-page document and pay $3,000 or $4,000, is ridiculous — it should be a two-page document,” he said.
“We have to come up with a short form SOA that can be used not just for SMSFs but generally.”
Mr Lesh added that rather than sitting under the ASIC licensing regime, the government should consider developing a separate SMSF adviser profession with its own training requirements, regulated by the TPB.
BGL is supporting a return of the accountants’ exemption through encouraging its users to sign a petition started by the Institute of Public Accountants which Mr Lesh said now had around 1,000 signatures.
SIGN THE PETITION http://bit.ly/2m0y5Vb