Calls for tighter controls on the use of SMSFs to prevent inappropriate advice or spruiking of their capital gains tax (CGT) position have been rejected by the SMSF Association as blaming the structure of those funds rather than dealing with poor or dishonest behaviour.
The industry body made the statement after a Senate inquiry heard proposed CGT and negative gearing changes, which exclude all forms of super, would drive more investment in property via SMSFs, opening up investors to property spruikers and high-pressure sales tactics.
Association chief executive Peter Burgess noted the issue with this type of activity was not the SMSF structure, but the conflicted, inappropriate and sometimes unlicensed advice provided to trustees that causes harm.
“This unscrupulous behaviour has no place in our financial services ecosystem and needs to be the clear focus of reform,” Burgess said.
“Treating SMSFs as the problem mischaracterises the issue and risks directing reform away from the conduct that causes the harm – it can lead to wrong conclusions and wrong solutions.
“Imposing new standards or investment restrictions on SMSFs in response to these concerns could have broader consequences.”
He added a blunt policy response would place constraints on trustee choice, but not improve consumer outcomes.
The association strongly supported any reforms to shut down high-pressure lead generation activity and close gaps in regulations that could be used to move consumers into unsuitable financial arrangements, he pointed out.
“The focus should be on those who exploit consumers through aggressive marketing, lead generation schemes and poor advice practices,” he said.
The association called for stronger measures to restrict unsolicited lead generation and consumer steering practices in a recent submission to Treasury, and put forward new measures to strengthen licensing, oversight and accountability across the advice and property promotion sectors, and enhance enforcement against unlicensed operators and those facilitating consumer harm.
“If policymakers are concerned about an increased risk of property-spruiking activity, then the solution needs to target this conduct directly, not to limit the structures Australians use to manage their retirement savings,” Burgess noted.
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason