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Unsuitable SMSF client claims overstated: SPAA
Claims that self-managed super funds (SMSFs) are being oversold to unsuitable clients have been over-stated, according to the SMSF Professionals' Association of Australia (SPAA) education and standards director Graeme Colley.
There was growing evidence to suggest a new-found awareness of how to use SMSFs, he said, citing the Australian Taxation Office's (ATOs) latest SMSF statistics.
"All the evidence suggests the right people are setting up SMSFs and, with the assistance of the appropriate professional specialists, are prudently managing their funds in a responsible way," he said.
The ATO reported 35,276 net new funds for 2011-12, up from 28,031 in 2010-11. Although these were record highs, Colley said the percentage increase in the number of net establishments had been slowing - increasing only 26 per cent for 2012 compared to 84 per cent in 2011.
Colley said the number of fund wind-ups had declined in 2012, from 14,699 in 2010 to 5108 in 2011 to 994 in 2012.
"These factors, together with increases in average SMSF balances, suggest reports that SMSFs are being oversold to unsuitable clients are being overstated," he said.
The ATO also reported a growing number of younger SMSF members, a stable contributions history and investment performance on par with Australian Prudential Regulation Authority (APRA)-regulated funds, Colley said. He said the estimated operating expense ratio of SMSFs had also fallen over the past four years.
The Association of Superannuation Funds of Australia (ASFA) expressed concern that a flaw in the draft proposal for an alternative to the accountants' exemption might give rise to the promotion of SMSFs to unsuitable clients.
It said claims from people who had been improperly moved into an SMSF had increased, according to the Financial Ombudsman Service and a number of legal firms.
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