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Spruiking, not LRBAs, the problem
Rather than focussing too narrowly on limited recourse borrowing arrangements (LRBAs), the Federal Government should also be focusing on whether so-called property spruikers can be regulated, according to SMSF Association chief executive, Andrea Slattery.
Slattery has told a roundtable conducted by Super Review's sister publication, Money Management, that the level of use of LRBAs by SMSFs was not, of itself, the problem but, rather, the activities of property spruikers.
"…the thing about it is that the statistics bear out that there are 11,500 funds out of 560,000 funds that actually have borrowing at the moment in them. Most of those have property. The total market value of those assets is 1.2 per cent and that's for all borrowings in SMSFs," she said.
Slattery said there had been a considerable blow-up around property spruiking and ASIC had been taking a number of those spruikers to task.
"But because they are unregulated in relation to a license and regime, that spruiking is actually something that needs to be licensed we believe," she said.
Slattery said that if those doing the property spruiking were to come under appropriate regulatory jurisdiction, then that spruiking was unlikely to occur.
Specialist financial services lawyer, Michael Hallinan said he believed that spruiking itself was the problem.
"Spruiking is the problem and it's not spruiking in super, it's spruiking per se. And you can't say it's a problem in super, where it's a problem elsewhere as well," he said.
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