The SMSF Association has flagged the number of large-scale cold-calling operations encouraging people to transfer their superannuation into SMSFs is of concern and the schemes breach anti-hawking and financial advice laws.
The industry body revealed its concern about recent industrial-scale schemes that encouraged people to transfer their superannuation savings into SMSFs.
Association chief executive Peter Burgess said there was a resurgence in this type of activity and cautioned people against accepting the advice of people “selling SMSFs”.
“The association has a long history of warning investors about the dangers of these types of schemes, which typically involve cold calling and investors being ‘sold’ an SMSF with a promise of unrealistic investment returns,” Burgess said.
“Such practices are contrary to what our super sector stands for – a long-term investment approach using a diversified portfolio with the end goal of achieving a dignified and secure retirement.
“In sharp contrast, these schemes typically ‘encourage’ people to establish an SMSF for the sole purpose of selling an investment product often associated with promises of unrealistic returns.”
He added the operations were characterised by self-interest sales, a lack of diversification, concentration in high-risk or poor investments and inappropriate selling of an SMSF to access an investment product.
Following the 2019 Hayne royal commission, anti-hawking laws were introduced in 2021 to ban unsolicited sales and cold calling, behaviour that also runs counter to the legislated best interest duty and the financial adviser code of ethics, which requires advisers to act in the best interest of clients and avoid conflicts of interest, he noted.
“In addition, all advice and recommendations must consider the broad effects arising from the advice and must be offered in good faith, competently and must not be misleading or deceptive,” he added.
He urged people who are considering setting up an SMSF to seek independent, professional advice from a licensed financial adviser or SMSF specialist.
“Deciding to set up an SMSF and take direct responsibility for your superannuation is a major financial decision that should never be taken lightly,” he explained.
“As the association has always maintained, SMSFs are not for everyone, so the input of an SMSF specialist before embarking on this journey is critical.”