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Strong case for new SMSF guidance

ASIC SMSF guidance

The SMSF Association believes two key pieces of research it has commissioned create a strong case for ASIC to review its consumer guidance for SMSFs.

There is a strong case for new consumer guidance about the costs and performance of SMSFs to be produced and distributed by the Australian Securities and Investments Commission (ASIC), according to the SMSF Association.

Association chief executive John Maroney said recent data indicating an SMSF with a balance above $200,000 performed at the same level as Australian Prudential Regulation Authority (APRA)-regulated funds had been presented to ASIC and should provide grounds for updated consumer guidance.

“The release of this research is the first public stage of getting the message out and it complements the research that Rice Warner completed on the cost side,” Maroney said during a recent presentation of the performance research.

“We have flagged this to ASIC – we gave them a pre-briefing – and will communicate with them formally once the research is public for them to review the guidance that was released a few years ago, which we believe is based on flawed research coming from Productivity Commission analyses that have since been critiqued.”

He added the association also wanted to raise awareness of the difficulties of comparing the ATO’s return-on-asset measure used with SMSFs to the rate-of-return approach APRA-regulated funds use for their performance reporting.

“There is a strong basis to revisit that guidance and these things don’t happen overnight so it might be a lengthy process of getting them to review this research in combination with the Rice Warner research,” he said.

“We are hopeful that over time ASIC will revisit their guidance and we end up with a significantly lower number than $500,000 as the threshold.

“ASIC may want to take other factors into account, but based on this research and the Rice Warner research there is a much stronger case based on the evidence for $200,000 as a threshold for an SMSF if you are going to have one.”

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