The Association of Superannuation Funds of Australia (ASFA) has pointed to the development of commercial relationships between accountancy firms, mortgage brokers, real estate agents and lawyers as posing a “genuine risk” to the provision of good advice with respect to establishing SMSF’s.
ASFA has raised the issue in a submission to Treasury, calling for tighter controls.
Referring to the ability of SMSF trustees to borrow money through limited recourse loans to purchase property assets, the ASFA submission, filed late last month, argues that property is not regulated as a financial product and that the results of this are “potentially problematic” for clients.
“We have seen the development of commercial relationships between accountancy firms, real estate agents, mortgage brokers and law firms that provide a one-stop service of purchasing property through the establishment of an SMSF. Because property is not regulated as a financial product under the Corporations Act, currently nowhere in these arrangements do we have an AFSL and certainly no obligation in relation to best interest duty or disclosure of conflicts and remuneration.”
The submission says the Financial Ombudsman Services (FOS) and law firms are increasingly being approached by people who should not have been advised to move from their existing funds into SMSFs.
"The world has changed and SMSF's are part of the structure of the superannuation system. It is important that we strengthen the structure as a whole, not weaken it.”
ASFA’s submission says that accountants and "others” should be authorised to provide financial product advice on SMSFs, or to provide advice on superannuation products in relation to a person’s existing holding.
“In ASFA’s view, an authorisation limited to SMSFs may mean that there is no obligation on the accountant to assess whether or not a person is better off in an SMSF compared to their current fund or product as they do not have the authorisation to give advice on other products.”