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FSRA fails to recognise super structures, say accounting bodies

Publication date: 08 May 03 | Source: THE TAX INSTITUTE

Following the Government's release of Regulation 7.1.29, Australia's leading accounting bodies - CPA Australia, the Institute of Chartered Accountants, the National Institute of Accountants and the Taxation Institute of Australia agree that progress has been made on the Financial Services Reform Act (FSRA), but still have concerns regarding the superannuation exemption to Regulation 7.1.29.

The intent of the Regulation 7.1.29 is to ensure that traditional activities undertaken by accountants are excluded from financial services reform and that accountants can continue providing traditional activities to their clients.

The professional bodies say that if accountants are not providing advice about a particular superannuation fund or particular investments, then that advice does not constitute financial product advice and should not require an Australian Financial Services Licence under FSRA.

ICAA CEO Mr Stephen Harrison said, 'The professional bodies believe that accountants must be able to advise their clients on the suitability of superannuation structures (self managed superannuation funds, small APRA funds, retail funds, industry funds, corporate funds and public sector funds).'

According to CEO of CPA Australia, Greg Larsen, 'In it's current format, the regulation as it relates to superannuation will create confusion in the market place, will be difficult to enforce, and will result in increased costs to clients for services that we consider do not pose consumer protection issues.

'If accountants are prevented from providing certain superannuation advice, these services may not be replicated by other providers in the market and could result in regional Australians, for example, not being able to obtain professional superannuation advice from their local accountant.

'CPA Australia's research indicates that 65% of small business seek advice from their accountant about their superannuation. Limited superannuation advice from their accountants could seriously disadvantage retirement planning for small business', said Mr Larsen.

Mr Harrison said the professional bodies acknowledged that a number of uncertainties had been removed from the legislation. 'Accountants can now undertake a broad range of traditional accounting activities - such as audit work, advising clients on operational and administration issues in relation to a self managed superannuation funds, setting up a business and the like,' he said.

NIA CEO Roger Cotton added that the professional bodies fully support FSRA and the view that licensing is required where consumers make a financial investment decision regarding financial products or classes of financial products to invest in.

'However, it is also clear that consumers need to be able to access professional advice regarding the complexities of various superannuation structures from an educated professional who is without bias related to commissions,' he said.

President of the Taxation Institute of Australia, Mr Gil Levy said, 'Professional accountants are widely recognised as experts in advising on complex taxation implications of the various superannuation structures and the choice of structures.

'It is entirely inappropriate that they need to be licensed to provide this advice and puts the quality of advice at risk if it is now to be provided outside the accounting profession,' he said.


For more information: Therase Keating, Communication Manager, CPA Australia, tel (03) 9606 9621 or 0408 544449