An SMSF business consultant has warned the findings contained in a recent Australian Securities and Investments Commission (ASIC) report about the sector’s financial advice provision indicate practitioners need to ensure they are properly protected against legal action from trustees in the event of an adverse outcome.
Speaking at the SMSF Association Sydney Local Community Christmas Lunch, SMSF Design founder Tracey Besters noted ASIC’s “Report 575 SMSFs: Improving the Quality of Advice and Member Experiences” highlighted an attitude among trustees indicating they did not take legal responsibility for their actions in running their own super fund and emphasised it could be problematic for advisers.
In particular, Besters highlighted one comment in relation to legal accountability contained in the report, where new trustee Rashpal from Sydney said: “That is the obligation of the financial planner, I can sue him in the court if he does something wrong in there so he is more worried than me that he should not do anything wrong. I take him to court the day he does something wrong.”
In response this comment, Besters said: “We’ve got this whole lack of responsibility in some respects from the members don’t we, so we need to be protecting ourselves as advisers.”
She described the trustee’s comment as scary and issued an ominous prediction.
“I think we’re seeing more and more of that. We’re certainly seeing a lot of auditors aren’t we having some issues in the courts because of a responsibility that perhaps the auditor didn’t need to offer,” she said.
From this perspective, she noted the 38-point checklist ASIC provided in the report was a good guide as to what advisers need to cover off in their client files.