The federal government should increase the education standards required for SMSF professionals as a way to prevent inappropriate advice on the retirement saving vehicles and misuse of limited recourse borrowing arrangements (LRBA).
The SMSF Association made the recommendation in its pre-budget submission where it stated, that given the risk of harm to consumers, it had often called for professional standards that require specialist accreditation.
“Raising of education standards of SMSF professionals will increase their knowledge relating to specific and complex legislation. It would also discourage advisers who wish to give SMSF advice or others who seek to provide services to SMSF trustees, but have not undertaken specialist SMSF training,” the submission stated.
The association pointed out requiring specialist SMSF advice would limit poor practices from professionals and spruikers.
“Introducing an SMSF education requirement would also limit advisers who are licensed but have poor knowledge of SMSFs and LRBAs from advising on these products,” it said.
“In turn, it then discourages property spruikers from entering the SMSF advice market as the education requirement could be too high.
“Furthermore, a requirement to seek specialist SMSF advice would restrict the practices observed in one-stop property shops and cold-calling activities, which have been shown to be a detrimental pathway to inappropriate limited recourse borrowing arrangements.
“Education cannot entirely prevent poor and misleading advice, but along with the implementation of other policy measures, including targeting those providing unlicensed advice, it will assist in providing additional safeguards for SMSF members from those who potentially lack the required knowledge to provide the specialist advice needed for SMSFs.”
The industry body welcomed the chance to discuss its concerns with Treasury, emphasising future policy development should consider a review of the role of accountants to ensure appropriate policy settings for the advice and accounting professions.