The banking royal commission has exposed the inadequacies of the SMSF advice industry, but should result in stronger enforcement of competency standards, an SMSF expert has said.
“Whether the advisers concerned were licensed, SMSF advisers with the big banks, members of the Financial Planning Association or the SMSF Association, they clearly were not competent,” I Love SMSF founder Grant Abbott said.
“They did not know how to read, understand and apply the laws – this is the true core of the mandatory SMSF advising skills competency standards that are part of the Corporations Act 2001, which have been in place since 2004 yet not known, applied, learned or heeded by the clear majority of SMSF advisers.
“The skills competency standards for providing advice in SMSFs are the law and have not changed.
“The best thing that the royal commission will bring to the industry is an enforcement of those standards through application and use every day.”
Abbott said with the Australian Financial Complaints Authority’s ability to dish out $500,000 fines for incompetent advice, the SMSF advice industry is in for a big shock and is going to shrink significantly.
“Don’t expect banks or insurance companies to support SMSF advice, particularly when their advisers don’t meet the relevant skills competency standards,” he warned.
“It is better to shut up shop on something that their compliance teams have no way of testing competency standards.
“There is plenty of reward for the true SMSF specialists. In the end, I see the royal commission is a fantastic opportunity, not a threat.”
I Love SMSF will be running a four-day SMSF specialist accredited course in Sydney from 4 to 7 June.