Of the 1,292 investment and advice disputes the Financial Ombudsman Service (FOS) accepted in 2016-17, about 12 per cent were related to SMSFs.
Almost half of these SMSF-related disputes involved complaints about the appropriateness of the advice the consumer received.
The majority of SMSF disputes are lodged against financial planners, which mirrors broader complaints data from FOS. Only four disputes about accountants were accepted last year, compared to 524 for financial planners. It’s important to note here that FOS only has jurisdiction over accountants who operate under an AFSL.
Emerging and problematic trends in relation to motives for setting up an SMSF could land planners and accountants alike in hot water, FOS’s Dr June Smith told ifa sister site SMSF Adviser.
Borrowing for property investment is increasingly driving SMSF set-up, which Dr Smith said is landing some clients with funds that are not appropriate for their capabilities or circumstances.
Further, networks and one-stop shop arrangements – for example where a real estate agent, finance broker and accountant work together – are in some instances compromising the best interests of the client by prioritising the sale of a property over the client’s retirement needs.
The event of an economic or property market downturn would compound the impact of poor investment decisions, particularly if the primary asset in the fund is property, and especially where repayments on a loan need to be honoured. Dr Smith said there has been instance of this in Western Australia, with the Perth market currently in a slump.
Advice related to rollovers from APRA-regulated superannuation funds to SMSFs is also a trouble spot for SMSF professionals who do not appropriately consider pre-existing insurance arrangements.
Dr Smith said FOS has seen a failure to properly disclose pre-existing medical conditions when applying for new policies, the cancellation of old policies prematurely and clients not being made aware of new policy waiting periods.
The FOS annual review also found that an increase in the number of general insurance disputes received in the 2016-17 financial year helped push the total disputes received for those 12 months to record highs.
idiot strategy as i’ve always said built to help developers and burn mums and dads…..prosecution is necessary!
524 complaints is 524 too many, however 524 represents 0.1% of the SMSFs in Australia. The result is outstanding.
Whilst on this, 50 out of 25,000 adviser churn, 0.2%.
Let me say the overall result in both cases is fantastic!
And people wonder why so few accountants have applied for a licence to recommend SMSFs. The reason is that only licensed advisers are subject to enforcement of the law. Unlicensed advisers like accountants and real estate agents can do whatever they like with impunity.
Yep, no surprise there. 524 financial planner complaints, only 4 against accountants. Enough said
(Real Estate Agent + Mortgage Broker + Accountant) + no client recourse = … enough said.
Yes, no surprises whatsoever and it’s not because the advice is poor from the planner. My experience is that the accountant would tell the client to rollover $900,000 from their retail/ industry super fund to a new SMSF. Set the fund up in 15 minutes with some large fries and a commsec account as well. Then tell the client to invest $450,000 into the big four banks plus an index fund and suggest the name of their favorite funds. the accountant has a quick chat about the market. Then the client walks out the door and into the stockbrokers or planners office and follows the accountants advice and invests funds into the stockmarket. When the market falls 20% plus, the client naturally won’t sue the accountant but takes the broker/adviser to FoS and states they got poor advice.
If you actually read the article you would realise why your comment is moronic, Accounts are not regulated by FOS unless they have an AFSL
Morale of the story, be a crook and provide unlicensed advice because “FOS only has jurisdiction over accountants who operate under an AFSL”….