The estimated high cost of running an SMSF, as publicised by ASIC in its SMSF Fact Sheet, has caught the attention of the chair of a parliamentary committee, who is set to grill the regulator over its performance in the last calendar year.
In releasing a notice about tomorrow’s House of Representatives Standing Committee on Economics hearing at which ASIC and the Australian Prudential Regulation Authority (APRA) will appear to answer questions on their respective 2019 annual reports, chair Tim Wilson said there was a strong need for consumer confidence in the financial sector as a result of the COVID-19 pandemic.
“The COVID-19 pandemic has created unprecedented disruption and uncertainty in the financial sector. Now, more than ever, it is essential to maintain strong prudential regulation and ensure fair and transparent dealings to safeguard financial stability and consumer trust in the financial sector,” the Liberal MP said.
“The committee will scrutinise APRA on how it promotes financial stability through the prudential regulation and supervision of ADIs (authorised deposit-taking institutions), insurers and superannuation licensees and will scrutinise ASIC on its enforcement strategy and supervisory approach.
“ASIC’s capability is of particular interest after recent data exposed errors in their SMSF fact sheet that should have been identified with basic critical reasoning.”
The ASIC SMSF Fact Sheet has attracted attention from the time of its release in November 2019 for stating the average cost of running an SMSF was $13,900 and required about 100 hours of time each year.
The SMSF Association rejected this view and suggested the cost was closer to $5000, and recently released ATO data for the 2018 financial year stated average operating expenses were $6152 and median operating expenses were $3923.
At the time of the release of the ATO data, Wilson labelled the ASIC figure as “sheer fantasy”, noting it also included investment and interest expenses, and said the ATO’s disaggregated and detailed data showed the “true” running costs of an SMSF.
The regulator has already answered questions about the fact sheet before the Parliamentary Joint Committee for Corporations and Financial Services, where ASIC chair James Shipton said the regulator received updated operating cost data from the ATO, but was still considering if it was going to update the fact sheet.
Since that appearance, ASIC has updated its website with a note on the original press release that the fact sheet data is now out of date and is no longer being distributed.
