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Accountants providing limited financial advice will need to sit the same exam as those offering advice under a full AFSL, requiring hours of “irrelevant” study.
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Accountants under limited licence set for ‘irrelevant’ exam
26 November 2018
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9 minute read
Under incoming and mandatory education requirements, accountants operating under an AFSL prior to 31 December 2018 will be required to pass the examination before 1 January 2021.
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The exam requirements were released by Financial Adviser Standards and Ethics Authority (FASEA), and consistent with all other guidance to date, there is no distinction between those operating under a limited versus a full AFSL.
The exam will cover three modules including the Corporations Act, particularly chapter 7 which covers financial services and markets; financial advice construction which looks at the suitability of advice, incorporating consumer behaviour and decision-making; and ethical and professional reasoning and communication.
“The Corporations Act and financial advice construction is very different for accountants compared to a financial adviser. An accountant doesn’t need to understand as many of the parts of chapter 7 as a financial adviser because they’re giving limited advice, and the financial advice construction is also quite different for accountants because they really only give full financial advice on SMSF structures if they’re under a limited advice authorisation,” The Fold Legal director Jaime Lumsden Kelly explained.
“I’m not sure whether FASEA has given any thought to whether these modules actually have any relevance to what an accountant with a limited advice background actually does,” she said.
Licensed accountants, she said, may have to spend hours studying content that will have little meaning or relevance to what they do just for the purpose of passing the exam.
“Obviously, accountants need to make sure that if they are advising on SMSFs, that it is suitable. But the difference is that an SMSF is a structure so it’s a little bit different to the way that you look at placing people in different products from different product providers and the considerations are a little bit different,” she said.
“[The new requirements] may end up being onerous to accountants who are only providing limited advice, just in the sense of how relevant the exam will be and the massive increase in CPD,” she said.
Where to from here?
The finalised content of the exam is not yet available, but unless FASEA runs a second exam for limited advice providers, it will inevitably end up covering some content which is irrelevant to them, Ms Lumsden Kelly said.
“Now, there may not be any appetite from FASEA to run two separate exam processes, but ultimately, I think it’s a negative for accountants providing limited advice if they end up having to do study or exams on content that once they take it back to their practice, it won’t help them in any way,” she said.
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