The SMSF Association has called for the introduction of increased barriers to entry for SMSF property spruikers as a method of reducing the incidence of inappropriate advice involving fund establishment for the purpose of purchasing residential real estate via limited recourse borrowing arrangements (LRBA).
These practices were raised as part of the recently released Productivity Commission draft report into superannuation.
“We agree this is an area of great concern and our recommendation certainly is to increase the barriers to entry for these unscrupulous individuals who are spruiking this sort of advice by requiring them to attain a much higher education level before they can be licensed to provide this sort of advice,” SMSF Association head of education and technical Peter Hogan said during the body’s most recent member webinar.
Hogan pointed out this measure would not stop people from providing unlicensed advice of this nature, but it would most likely make this type of questionable activity easier to detect and eradicate.
“Our proposal around higher education levels will not solve all problems because people who break the law will break the law regardless of what the law says and by simply adding additional legislation there will just be more laws they’re breaking,” he said.
“It won’t stop them doing the wrong thing. We always acknowledge that, but nevertheless we do believe the higher education standards are appropriate.”
He noted the Australian Securities and Investments Commission had to increase its scrutiny of these types of activities and advice, but was adamant one potential solution to the problem the Productivity Commission has considered is not the right way to proceed.
“We believe, and we’ve made it clear, that the banning of limited recourse borrowings is not the right policy response and not the right policy setting,” he said.