SMSF advice up for further review after probes

The SMSF sector is likely to be subjected to another review from the Australian Securities and Investments Commission (ASIC), which will examine a number of red flag areas recommended by the Productivity Commission.

Speaking at the SMSF Association National Conference 2019 today, ASIC acting senior executive leader Kate Metz said the regulator would return to the SMSF sector despite having already conducted a review in mid-2018, which was released as “Report 575: Improving the quality of advice and member experiences”.

“Going forward it is an area we will look at again, particularly in the light of the Productivity Commission recommendation that we have a further look, and the banking royal commission recommendation that in a few years’ time there is a review to see whether the quality of advice has improved, and this would be a sector we would look at,” Metz said at the conference in Melbourne.

She said ASIC’s focus on the SMSF space would continue to be on the quality of advice and would be ‘actively implementing’ the recommendations from the royal commission around gauging any improvement in the quality of advice.

“As part of that work, it is a possibility that we may rerun a piece of work, like we have done, to see if the quality of advice has improved in the SMSF space,” she added.

She also called on financial advisers and accountants to take a leading role in ensuring SMSF trustees were informed about their role and the purpose of a fund, adding ASIC found many trustees had set up funds without a full understanding of what that entailed.

“You are the professionals and are being sought for professional advice. We do expect you to not merely execute the wishes of clients, but to tease out if this is really what they are after, is really in their best interests, are they a suitable candidate for an SMSF and what will they do with it once they get it,” she said.

“We are very alarmed when we see on a file that an adviser set up an SMSF because that’s what a client wanted.”

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