Call to phase out limited licensing and set up new advice system

SMSF Association Media Release

09 January 2020

The SMSF Association wants limited licensing phased out and a new advice framework established to better meet the needs of self-managed super fund (SMSF) trustees.

In its 2020-21 Budget submission, which focuses on ways to improve the simplicity and accessibility of superannuation to benefit consumers and advisers, Association CEO John Maroney says limited licensing prevents SMSF trustees from getting basic SMSF advice without incurring a significant cost.

“If an SMSF trustee wants to seek advice regarding the establishment of a pension from their accountant, unlicensed accountants are unable to provide this simple advice. Licensed advisers can provide this simple advice, but it involves costly documentation disproportionate to the advice sought.”

The Association’s submission says the current overarching regulatory framework regulating professionals who deal with SMSFs is complicated, inefficient and able to be worked around.

“The desired policy outcomes from introducing limited licensing have not been achieved. Individuals have unmet needs, advisers face high regulatory costs and accountants are strangled by regulation.

“What we’re proposing is a new consumer-centric advice framework with improved SMSF advice a critical element of this project.

“Accordingly, we encourage Government to address the regulatory framework by transitioning the defunct limited licence to a new consumer-centric framework that raises advice standards and rectifies the advice gap to allow appropriately qualified SMSF advisers to provide low-cost, simple advice.”

Maroney says: “As we state in our Budget submission, the ultimate goal is to advocate for reform that reduces complexity, improves efficiency and drives harmonisation to better enable the provision of affordable, accessible and quality advice to business and consumers.”

The Association has also used its Budget submission to request the ATO to allow greater access to its portal.

“Currently, only registered tax agents (typically accountants) are able to access its portal to get Total Superannuation Balance (TSB) and Transfer Balance Cap (TBC) information that is crucial for SMSF advice.

“Ironically, these individuals are generally not able to provide SMSF advice as they are not licensed with ASIC. Incongruously, those licensed advisers who can provide SMSF advice (such as financial advisers) have no reasonable way of sourcing ATO portal information directly from the ATO as they are not, generally, the member’s personal tax agent.

“There is a fundamental lack of information for SMSF advisers who need to provide timely advice based on myriad of complex caps, thresholds and balances. Accountants can get information but cannot provide advice and financial advisers are unable to get information but are the individuals able to provide advice. This jeopardises the quality of advice being provided to members.

“The move to open data and increased access to the ATO portal is an essential next step for the $750 billion SMSF industry and the only means by which the sector can institute commercially viable operational surveillance to the standard the ATO rightly requires, and we encourage the Government to make this an ATO priority project.”

The Association also used its submission to propose a spousal rollover, increased contribution flexibility and simplify superannuation complexity around thresholds, residency rules, death benefits and legacy pensions.

Click here to view the SMSF Association Budget Submission 2020-2021.