A fourth alternative to licensing has recently been noted by specialist compliance consultant, Jeremy Danon. It has become apparent that some accountants have taken the view that they do not fall within the licensing regime as they are not carrying on a financial services business. However it is important to consider the limbs that constitute a financial services business — a financial product and a financial service.
The definition of “dealing” extends further than simply buying, selling or varying a financial product — it also includes applying for and arranging for. It is essential to understand the extent by which this definition impacts an accountant and the manner by which these services are provided.
An accountant who provides assistance to the establishment of a client’s SMSF will most likely be “dealing” in a financial product. This act includes not just handling the paperwork, but also forwarding on the forms and documents provided by a client to an applicable service provider.
Ultimately, whether the activities of an accountant assisting their client constitutes arranging is a question of degree. RG36 provides some guidance in this regard. Generally, a person’s conduct may constitute arranging if their involvement in the chain of events leading to the relevant dealing is of sufficient importance that without that involvement, the transaction would probably not take place. Also, it is important to consider whether the person derives a financial benefit from the transaction.
Accountants who completely remove themselves from any potential involvement by simply referring or introducing a client to the service provider for them to undertake the establishment of the SMSF themselves, will not be seen as dealing. However, in all other instances, it is hard to argue this is not the case.
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