In a statement issued yesterday, ASFA said the licensing – or lack thereof – of the SMSF sector is a major concern, given reports of SMSF members being “offered luxury international holidays in exchange for buying property through their fund”.
“For some time now, ASFA has been concerned about the growing number of people being targeted by schemes which offer attractive incentives up front at the expense of good retirement outcomes down the track,” said ASFA chief executive Pauline Vamos.
“Such schemes run the risk of falling foul of the sole purpose test that applies to all SMSFs. As well, provision of large incentives indicates that a property is not being sold at a fair market price.
“With more and more people entering the SMSF sector each day, it’s critical the regulators address the growing concern the community has around its governance, and ensure professionals working in this area are licensed appropriately.”
The concerns raised are indeed valid and so supported. The calls for more scrutiny, regulation, control, compliance, disclosure, education, banning, etc are well and good but they are rather blunt, cumbersome and often largely ineffective instruments.
Rather than simply criticise from the sidelines it would do clients and the advice industry a lot more good if more advisers were allowed and encouraged to pro-actively assist clients with all aspects of their direct property needs (in or outside super) and not just discussing strategy and generic cash flow modelling.
Until that happens clients are effectively forced by advisers to go to unknown parties with unknown skills and unknown (sales) agendas to produce unknown results.
Therefore, large sections of the advice industry are equally culpable and part of the problem, much less part of the solution. Does it begin with dealer groups and industry bodies, or a grass roots push from advisers – or both?
Couldn’t agree more. So long as the regulation is effectively targeted and not just more red tape, or pandering to the demands/concerns of other market participants. AFSL conditions on investment property would be a good idea (I’m sick of reading “capital gains guaranteed” next to property adverts). It seems like nonsense that the investment that needs the biggest single commitment of capital is left open to every two bit charlatan to sell. However this is a much wider problem than just SMSFs.
Receiving a direct benefit from your superfund such as a holiday is a contravention of the act already….ATO are going to have some fun with this….
See…..this is what happens when you over regulate the advice industry and blame them for every market failure. The costs of giving advice goes up, the creativity in advice is stifled….and then the unlicensed spruikers move in for the kill.
Another example of ASIC and the previous governments lack of vision and inability to read trends.
So an advisor offering a holiday and a major industry fund offering a holiday, via sponsoring The Voice aren’t conflicted.
How is sponsoring a television shows competition in members best interests and they have a AFSL?
Going on step Sports sponsorships and corporate boxes for sporting events?