Shadow shop supported in the main

The Australian Securities and Investments Commission’s (ASIC) announcement at last month’s SMSF Association National Conference that it will be conducting a shadow shopping exercise on SMSF advice has been met with a mixed reaction from sector practitioners.

Views were expressed on LinkedIn in response to a story on the subject published by selfmanagedsuper, with an initial post viewing the activity unfavourably.

Superannuation Warehouse Australia director Hein Preller likened the exercise to entrapment and encouraged the corporate watchdog to “go after some real crooks” and begin its investigation on more proven ground.

“I suggest they look at client complaints from an independent ombudsman like FOS (Financial Ombudsman Service) and work their way up from there,” Preller wrote.

In response to why accountants would be resistant toward or scared of the process, he said: “It is because accountants have a clear track record with clients and because of professional standards [they] do the ethically correct procedures with clients.”

Keep It Simple Super information control manager Scott Taylor refuted the claim of regulator entrapment and thought the end result would be positive for the industry.

“I don’t see a problem with this approach unless the accountant/adviser is getting it wrong. We know what standards are applied to us and what is expected from us, so let’s show the regulators that we are a trusted profession and let them deal with the shonks,” Taylor said.

Other practitioners were also welcoming toward the shadow shop and considered it logical seeing ASIC had only received 1181 licensing applications from accountants.

“Can you really blame them when the applications for a licence have been so low? Surely this is a pointer to the fact that many may be still ignoring the law,” Verante Financial Planning director Liam Shorte wrote.

“I honestly hope they find that most have simply stopped unlicensed advice and are pointing clients in the right direction by either partnering with licensed planners or having a colleague in their practice who is licensed,” Shorte added.

Fortune Financial Advice chief executive Rob Gould hoped the exercise would help eliminate situations where individuals were being advised to establish an SMSF inappropriately.

“The interesting thing is that as a SMSF practitioner (AFSL license and CPA practice) I have obtained clients that have not been properly advised and should not be in an SMSF, or they have not been advised in accord with ASIC process that we in AFSL land have to follow,” Gould wrote.

“Yes we may disagree about that process but it is the law. Accountants do not provide advice documents if [they do not hold an Australian financial services licence]. I hope that they find the ones, every industry has, that are not following the process required so clients are informed adequately or it is a level playing field.”

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