SMSF SoAs face issues with compliance: ASIC

20 February 2019
| By Hannah |
image
image
expand image

The majority (62 per cent) of self-managed superannuation fund (SMSF) advice given by advisers isn’t compliant with the Best Interests Duty, and 19 per cent of clients receiving such advice are at risk of financial detriment as a result of the advice received.

Research by the Australian Securities and Investments Commission (ASIC), presented at today’s SMSF Association National Conference in Melbourne, was based on an independent study of 250 statements of advice given to SMSF clients.

ASIC’s senior manager, financial adviser, Kate Metz clarified to delegates that non-compliant advice wouldn’t necessarily have caused detriment to clients, but reminded them even should a client say they want an SMSF, it was their duty as advisers to make sure that was in their best interests.

She said that some of the justifications given for SMSF establishment by advisers was just that “the client said that they wanted one”.

Advisers in the room felt that more guidance was needed from ASIC on what various obligations enforced by the regulator entailed however, with questions to this effect receiving resounding support from the crowd.

The 19 per cent of SoAs that showed advice potentially causing detriment did so as they had only recommended investment in one asset class, being property. Consumer research by the regulator had also found that some consumers concernedly thought that buying multiple properties amounted to diversification.

The same research also found that a concerning level of consumers didn’t understand essential factors to the operation of the SMSFs.

Around 30 per cent believed that they did not need an investment strategy for their fund, with the same amount thinking that they were entitled to compensation should their fund be subjected to fraud. A further 19 per cent had not considered their insurance needs.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

11 months ago
Kevin Gorman

Super director remuneration ...

11 months 1 week ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

11 months 1 week ago

Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Co...

1 day 13 hours ago

Demand from institutional investors was the main driver of growth in Australia’s responsible investment (RI) market in 2023, as the industry continued to gain momentum....

1 day 13 hours ago

In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges....

1 day 14 hours ago