Mandatory specialist education for SMSF practitioners would restrict the ability of property spruikers and advisers without adequate training to provide advice related to SMSFs and would fill a gap identified four years ago, according to the SMSF Association (SMSFA).
In a submission to Treasury as part of its consultation on financial adviser education standards, the SMSFA stated it would support any measure that increased the education standards required for SMSF advisers as it would raise the bar for current practitioners and block non-specialised advisers.
“Raising of education standards of SMSF advisers will increase their knowledge relating to specific and complex legislation. It would also discourage advisers who wish to give SMSF advice but have not undertaken specialist SMSF training,” the submission stated.
“Introducing an SMSF education requirement would also limit advisers who are licensed but have poor knowledge of SMSFs and limited recourse borrowing arrangements from advising on the product.
“In turn it then would discourage property spruikers from entering the SMSF advice market as the education requirement could be too high.”
The association noted specialised education and training may not prevent poor advice, but it could, with other policy measures, provide a safeguard for SMSF members from advisers who may lack the knowledge to provide specialist SMSF advice.
The industry body also claimed a requirement to seek specialist SMSF advice would limit the work of one-stop property shops, which were flagged in Australian Securities and Investments Commission Report 575 as a “detrimental path to inappropriate limited recourse borrowing arrangements”.
The SMSFA pointed out the report also highlighted the need for higher education standards for SMSF advice providers and it would engage with the Financial Adviser Standards and Ethics Authority (FASEA) on specific SMSF qualifications for advisers wishing to provide SMSF advice.
“We note that no guidance or framework was produced by FASEA for consultation prior to its cessation, despite the urging of ASIC and the Productivity Commission as far back as 2018,” it said.
Commenting on proposed changes to education pathways, it stated the adoption of an experience-only pathway to meet education requirements did not meet the policy intent of enhancing professional standards and moving the advice sector towards being a profession.
“We acknowledge the concern surrounding declining financial adviser numbers and the importance of retaining experienced financial advisers in the industry,” it said.
“However, a model, such as the one proposed, would not have been needed were a more consultative approach taken with industry and appropriate model introduced from the outset.
“We remain optimistic, noting that there is still a window of opportunity within which to adopt more appropriate settings whilst achieving the desired outcome.”
