Speaking at the SMSF Professionals’ Association of Australia (SPAA) conference in Melbourne today, SPAA technical director Peter Burgess said a Cooper Review recommendation that SMSF trustees consider their full insurance arrangements – regardless of whether any insurance is held in the fund – could mean investment advisers would need to have the right competencies and licensing to advise on risk.
Burgess said it would have been better to make insurance a separate standard, rather than force investment advisers to give risk advice.
The Cooper Review framed the recommendation in response to a finding that fewer than 13 per cent of SMSFs hold insurance on behalf of members, suggesting underinsurance could be an issue within the sector.
“But there are good reasons why trustees don’t hold insurance in their SMSF so I don’t subscribe to the view we have an underinsurance problem in SMSFs,” he said.
SMSF advisers will also have to get their heads around market crossing, which will become the only way to get listed assets into an SMSF once new regulations come into force on July 1 this year, Burgess added.
If you force trustees to go on-market, it’s a breach of the Corporations Act because you can’t sell an asset with the intention of buying it back, so there may need to be an amendment for SMSFs, he said.
