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SMSF borrowing issue over-blown
The level of borrowing in self-managed super funds is not out of control but rules do need to be tightened around consumer protection, the AMP SMSF division said.
Speaking at an AMP roundtable on self-managed super funds, head of policy, technical and education services Peter Burgess said borrowing rules can provide important benefits for SMSF investors if used in the right circumstances.
"I think I heard it described the other day as a runaway freight train or something [but] we don't subscribe to the view that the level of borrowing is out of control," Burgess said.
But Burgess said he supports the corporate regulator's recent crackdown on property spruikers and "unscrupulous" advice in this area.
He said the debate from the government around these rules seems to have shifted from "should super funds be allowed to borrow" to "why shouldn't we repeal the provisions?".
Based on the tone of the Financial System Inquiry, Burgess said he would not be surprised if there is a recommendation to repeal these provisions.
Burgess said the borrowing provisions are gearing strategies, which allows SMSF investors to speed up the growth of retirement savings, which can boost savings of those who have not had a chance to save during their earlier stages of life.
But he emphasised that since it is gearing strategies, investors should have access to quality, licensed advice.
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