The SMSF Professionals’ Association of Australia (SPAA) has released lending and advice guidelines for practitioners providing advice on limited recourse borrowing arrangements (LRBA).
The move reinforces SPAA’s concerns about the development of gearing within SMSFs and its calls for the need for practitioners providing this type of advice to be licensed.
“SPAA has spent several months developing the SPAA best practice guidelines for LRBAs and has asked the major lenders in the industry to commit to the best practice guidelines, ensuring that consumers will get the best advice,” SPAA chief executive Andrea Slattery said at the professional body’s State Technical Conference in Melbourne last week.
“We’d also like to announce that NAB is the first organisation to fully commit to both of those lending and advice guidelines.
“We’re hopeful other major lenders will follow suit and we believe this is an exciting development for our industry, giving the regulators and the FSI (Financial System Inquiry) confidence the industry is prepared to tackle significant issues in a meaningful way, but more importantly assist consumers to seek out those advisers and institutions committed to those best practice guidelines and so the consumers and the industry have a win-win.”
The new guidelines actually contain two separate components, with one specifically for lenders and the other being procedures covering the provision of advice.
“The lenders’ guidelines are intended to establish banking industry standards that can complement individual LRBA credit policy and practices regarding LRBA lending to SMSFs,” Slattery said.
“The advice guidelines are proposed to create a best practice standard of advice that should be provided to SMSF trustees considering the use of LRBAs if they elect to seek personal advice.”
She pointed out SPAA would continue to support any moves the regulators made to eliminate rogue behaviour in regard to LRBAs.
“We will continue to make any recommendation to government along these lines in the future,” she said.