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ASIC surveillance into the provision of unlicensed SMSF advice has found five accountants that ASIC has concerns about and will take regulatory action as necessary. 

On 28 June ASIC released Report 575 about the research it has undertaken to examine:

  • member experiences in setting up and running SMSFs; and
  • whether advice providers are complying with the law when providing personal advice to retain clients to set up an SMSF

ASIC considers that the decision to set up an SMSF is one of the most significant steps a consumer can take in relation to their retirement savings – given the risks, time, resources and compliance obligations that moving superannuation out of a prudentially regulated environment entails.  The research commissioned an independent market research agency to explore why members had set up an SMSF and their experiences running it.

ASIC state that they have been active in taking action to stop unlicensed activity in the SMSF sector.  The report points out that the laws around SMSF advice have been subject to considerable reform recently including:  FOFA (since 2012), the introduction of the financial advisers register since 31 March 2015, the removal of the accountants exemption on 1 July 2016 and the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 which increases the professional, ethical and education standards for financial advisers from 15 March 2017.

Key Findings

(a) Family members and friends or colleagues were the main prompts for setting up an SMSF, followed by advice from financial advisers and accountants.  Property ‘one-stop-shops’, real estate agents and cold calls were also prompts

(b) Members had a number of motivations for setting up an SMSF.  For many it allowed them to get out of an APRA regulated fund and gain control over their superannuation

(c) A number of members saw an SMSF as a vehicle for investing in property – motivated by a fear of being locked out of the property market and/or a desire to help children enter the property market

(d) Around a third of members found the SMSF to be more costly than expected and more time consuming than expected

(e) Many lacked an understanding of some of their basic SMSF and legal obligations as SMSF trustees

(f) ASIC found five accountants whose services they are concerned about, and will take regulatory action where necessary

ASIC’s next focus

  1. Consumer education – providing useful and reliable information about SMSFs
  2. Policy work – including guidance for accountants
  3. Surveillance and enforcement – looking at unlicensed financial product advice as well as the advice provided by property one-stop-shops and misleading advertising