With the accountants exemption having been repealed at the beginning of July this year, accountants now must obtain an Australian Financial Services License (AFSL), or work under another organisations’ AFSL, to keep practices above board and in line with the new regulations.
Figuring out the ins-and-outs of whether you absolutely need an AFSL, what exactly is even covered by it and what’s excluded can be confusing, but not to worry as below and in Part 2, we’ve cleared things up for you, drawing your attention to the most important things you need to know for the second half of 2016 and beyond.
Section 911A of the Corporations Act requires an accountant to possess an AFSL if all of the following sections apply:
The item is a Financial Product
You’re providing a Financial Service in relation to the product, such as giving guidance, or dealing in the Financial Product
You’re running a Financial Services Business
1. The presentation of purely factual information to a client, but: “where the information is presented in a manner that may reasonably be regarded as suggesting or implying a recommendation to buy, sell or hold a particular financial product or class of financial products, it will be financial product advice”, states the CPA Australia & Institute of Chartered Accountants Financial Advice & Regulations Guidance for the Accounting Profession 2016 Amendments.
2. Direct property:
Because direct real estate is a physical asset, not a facility, it isn’t considered a financial product under Act Section 763A so any guidance given in relation to direct property is not ‘financial product advice’. But, it gets a little tricky understanding where to draw the line as an accountant can’t recommend a client buy a property through a self-managed super-fund without the appropriate license.
3. Other physical assets such as art, stamp and wine collections
4. Credit facilities:
A credit facility is also not a financial product under Section.765A(1)(h) of the Act (as long as it meets the description of a ‘credit facility’ as outlined in Reg.7.1.06. Home loans for example, do not qualify as financial products and thus, don’t necessitate an AFSL. So excluded from AFSL are:
Margin lending facilities
The debt securities of securitisation vehicles
Debt securities issued by a bank