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ASIC is sending “please explain” letters to accountants they believe may be in breach of financial services laws.

For some time, ASIC has hinted that they will monitor unlicensed accountants activities and they’ve now followed through with the help of some new technological weapons. It appears as if ASIC has used regtech to review the website content of accounting practices en masse. This has allowed them to easily identify if any unlicensed accountants appear to be providing financial services.

The ASIC letters then ask unlicensed accountants to:

  • Explain why they don’t need an Australian financial services (AFS) licence;
  • Provide any legal advice that supports their position; and
  • If the accountant believes they do need an AFS licence, they must explain what steps they’re taking to obtain one.

While these may seem like relatively simple questions to answer, many accountants rely on a plethora of exemptions, including the tax advice, SMSF establishment, business valuations and risk management exemptions, among others.

This means even accountants who are legally operating without an AFS licence may find it difficult to articulate exactly why they are exempt from financial regulation.

Some accounting practices may also find that they actually do need an AFS licence now. For example, accountants who continued to operate in the SMSF establishment space after 1 July 2016 but did not restructure their services properly.

Unlicensed accountants who realise that they do need a licence now may face even more issues. That’s because ASIC has decided that any experience they’ve gained while being exempt from licensing can no longer be used to obtain an AFS licence. This means an unlicensed accountant will need to operate as an authorised representative for at least three years before they can apply for a licence.

Act quickly if you have received a letter from ASIC about your financial services activities - you don’t want to tarnish your record with the regulator. If you’re not sure whether you’re exempt from AFS licensing regulations or would like some help responding, please contact us. After all, you don’t want to risk putting a foot wrong with ASIC.

The Fold can assist you by:

  • Helping you to obtain and manage an AFS licence;
  • Providing advice on your licensing options; and
  • Putting you in touch with licensees who might be interested in appointing you as an authorised representative.

You may also find The Fold’s SMSF Services Manual useful. It’s a comprehensive guide that outlines what services you can provide as an unlicensed accountant who is not authorised. This can be a complicated area so do seek legal advice if you’re unsure. We’d be happy to help.

Author: Jaime Lumsden and Sónia Cruz

September 2017

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