The Financial Ombudsman Service (FOS) has revealed that SMSFs represent a significant portion of accepted disputes, with property remaining a key problem area.
Year to date, the FOS has accepted 811 disputes into investments and advice, 89 of which relate to SMSFs.
"SMSF advice continues to be a main element in the disputes that we've accepted," Dr June Smith, lead ombudsman, investments and advice at FOS told ifa 's sister publication SMSF Adviser.
The main issues sparking these disputes include inappropriateness of advice, failure to follow instructions and failure to act in accordance with the agreement with the client.
Further, misleading product or service information and general service quality issues – such as failure to implement advice in a timely way, failure to act diligently and failure to communicate effectively – are also ongoing problem areas.
Accountants who are new to the AFSL regime should take particular care to operate in the best interest of their clients, Dr Smith said, with that being a major feature of the disputes handled at FOS.
"It's not about the most perfect advice or the best advice, but it is about making sure that the advice that you give to your client is reasonable, and also that you've put your client's interest ahead of your own," Dr Smith said.
"Ensure that you have disclosed and managed conflicts of interest, for example, and demonstrate that there is a benefit to your client if they accept that advice and move forward with it.
"We say to accountants in particular when they're transitioning to the new licensing framework to make sure when they give advice to their clients that they can demonstrate in their file notes and their written advice to a client [...] that there is a demonstrated benefit to their client in accepting the advice that is being given."
A particularly common area of dispute with SMSF advice involves buying or transferring a property into an SMSF with a borrowing arrangement in place.
"That's one area that we have seen quite commonly in our disputes this financial year and also in years past," Dr Smith said.
Dr Smith reminded accountants who have clients interested in property investment or borrowing their SMSF that they are subject to strict licensing requirements.
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