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ASIC SMSF scope moves beyond advice

ASIC’s regulatory focus in the SMSF space is moving from financial advisers to “one-stop shops” offering property investment and finance services, deputy chair Peter Kell has announced.

Speaking at the Mortgage & Finance Association of Australia annual conference on the Gold Coast yesterday, Mr Kell told the audience of mortgage brokers and credit advisers that while ASIC’s SMSF focus to date has been on “the financial advice given to consumers about the establishment of an SMSF or the investments to be made by an SMSF”, the regulator’s scope is now broadening.

“We have recently started taking a closer look at potential risks associated with one-stop shop business models that provide advice on and assist in: establishing SMSFs, sourcing and purchasing of investment properties, and obtaining finance for the property purchase,” Mr Kell said.

While the regulator acknowledges there “may be benefits for the consumer in being able to access a number of services under one roof", Mr Kell said he was keen to ensure the quality of advice was not “compromised” within these business structures.

In particular, Mr Kell warned against inadvertently providing unlicensed advice when making recommendations about investment in real estate, thereby triggering a breach of relevant laws.

“ASIC has previously cancelled a credit licence and banned its director from engaging in credit or financial services due to a number of concerns, including the provision of unlicensed SMSF advice,” Mr Kell reminded delegates.

He also warned delegates about the risks and complexities of dealing with limited recourse borrowing arrangements (LRBAs) for SMSFs, explaining that these arrangements are “much more complex than a normal home loan”.