Trustees need to assess SMSF product offers with greater scrutiny or risk incurring heavy fines under the Australian Taxation Office’s (ATO) new penalty regime, a specialist superannuation lawyer has said.
In warning trustees about this issue, Townsends Business and Corporate Lawyers principal Peter Townsend was specifically referring to offers where establishment of an SMSF at no charge was included with an investment in a particular asset class.
“As the saying goes, ‘there is no such thing as a free lunch’, so when making decisions regarding SMSFs, it is vital that the true cost of the service is considered, and not only in a financial sense,” Townsend said.
He highlighted a few key factors trustees should take into account when examining products with associated bonus offers. They include looking at the level of initial and ongoing service, the quality of the product and service, any restrictions included with the service, and any obligations to commit to a particular service provider in the future.
“As the new penalty regime for SMSFs draws closer, advisers and their clients need to be aware that poor product choice could see trustees being hit with heavy penalties if they are not careful in ensuring fund compliance,” Townsend said.
To emphasise his point, he cited an offer from administration provider SuperHelp for free fund and pension set-ups as an example of a situation where additional conditions were included.
In this instance, SuperHelp did state conditions applied with the offer, but the said conditions could not be found on any associated promotional material and were only posted on its website.
The Australian Securities and Investments Commission (ASIC) investigated the offer to determine if it was false and misleading advertising that might cause consumers to make an inappropriate financial decision.
Following the regulator’s investigation, SuperHelp was issued with a $10,200 infringement notice penalty.
“This is not the first time ASIC has been required to investigate advertisements in relation to SMSF products. Earlier this year, Media Super Limited was also fined for producing potentially misleading information about the performance of its funds against SMSF products,” Townsend said.
