ASIC, financial advice

ASIC to review SMSF advice

ASIC SMSF establishment Financial advice Review Information Sheet 274

ASIC will conduct a review of SMSF advice with a particular focus on how advisers are meeting their obligations under guidance released in late 2022.

The Australian Securities and Investments Commission (ASIC) will conduct another review of SMSF advice based on guidance around establishments that it released in late 2022.

ASIC financial services and wealth senior executive leader Leah Sciacca said the review was part of the regulator’s corporate plan and would measure the level of compliance with Information Sheet 274, which covered the provision of SMSF advice.

“In December 2022, we published that information sheet with tips for giving SMSF advice, which replaced and consolidated our previous information sheets,” Sciacca said during a presentation at the SMSF Association National Conference 2024 in Brisbane today.

“The overarching objective of the new information sheet was to help financial advice licensees and their representatives comply with their obligations.

“This year we will review a sample of SMSF establishment advice given since the release of those info sheets to assess the quality of the advice.

“With this review, in particular, we will want to see how the info sheet has assisted industry to address the areas that we highlighted in that report.”

She said the sample size and review methodology were still being determined, but the driver behind the undertaking has been ongoing concerns about the nature of advice provided during the SMSF establishment process.

“Setting up an SMSF is a significant step and may have serious consequences for consumers, particularly their retirement savings and also insurance cover,” she said.

“Financial advisers advising clients about their super must use their professional judgment to consider the broad range of relevant factors in order to ensure SMSFs are established only when it is suitable for the unique objectives and circumstances of the individual client.

“ASIC has previously undertaken SMSF advice thematic surveillances and it remains an area of interest for ASIC.

“As well as observing instances of inappropriate SMSF advice in those past reviews, we have in our enforcement work seen some examples where SMSF consumers have been exposed to financial adviser fraud and dishonesty, sometimes also involving borrowing and related-party property purchases.”

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