The Australian Securities and Investments Commission has found 'room for improvement' in the professional advice given to self-managed superannuation fund trustees, and is poised to take action.
Speaking at the CPA Australia conference in Sydney yesterday, ASIC Commissioner Peter Kell said a number of concerning findings have come to light as part of the regulator’s investigation into SMSF advice, launched in September 2012.
The taskforce – which is due to hand down a report in coming weeks – reviewed more than 100 files of financial planners and accountants providing advice to SMSF trustees, with a particular focus on elderly and lower-income trustees and funds with a single-asset or under-diversified investment portfolio or less than $150,000 in assets, and rated the advice proffered on a scale of ‘good’, ‘adequate’ and ‘poor’.
“Overall, we concluded the majority of investors in the sample received ‘adequate’ advice, with relatively few receiving ‘good’ advice,” Commissioner Kell said.
“But while the majority received adequate advice, there were concerning pockets of ‘poor’ advice, and much of this advice concerned recommendations to set up an SMSF in order to gear into real property.
“Where this advice was inappropriate, ASIC will be taking follow-up actions and if necessary, regulatory action.”
While the commissioner was clear that the review was not a “representative sample” of the wider SMSF advice sector, but was focused on high-risk funds, he said it is now evident that there has been “a growth in less scrupulous operators targeting SMSFs”.
A number of areas where SMSF advisers have “room for improvement” were listed, including a lack of sufficient tailoring of advice to clients’ needs, absent or inadequate insurance recommendations, investment diversification advice and explanation of SMSF alternatives, or lack thereof.
The commissioner also pointed to “inadequate concern for client’s long-term retirement planning needs” and the importance of explaining to SMSF trustees the benefits of joining a statutory compensation scheme in the event of fraud or theft.
“Dodgy property spruikers” targeting SMSF trustees through midelading advertising and marketing materials are particularly on ASIC’s radar, Kell said, adding this practice will be a key focus of the taskforce going forward.
“We will be cracking down on all gatekeepers doing the wrong thing,” he said. “I don’t want to be speaking to you in five years about what went wrong.”
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