ASIC tightens vice grip on SMSF property advisers

by Mackenzie McCarty15 Jul 2013

ASIC has announced an escalation of its ‘crackdown’ on SMSFs amid concerns dodgy spruikers are pushing clients into the sector.

According to the Australian Financial Review and confirmed by an ASIC spokesperson, the move will be supported by a ‘detailed paper’ from actuaries Rice Warner, educating consumers about ideal asset levels and what to consider before switching to an SMSF, which will be released in coming weeks.

ASIC chairman, Greg Medcraft, has dubbed SMSFs as a ‘fragile’ zone and says the sector’s growth will be the ‘greatest challenge in the next decade’.

“Frankly, making sure those investors can be confident and, more importantly, that they are informed, is absolutely critical,” he told reporters in March.

In April, commissioner Peter Kell had launched his campaign against ‘dodgy property spruikers’ and promising consumers that ASIC would be taking tough action, including taking spruikers to court. He has now told reporters that ASIC has ‘a number of investigations’ under way.

SMSF property investment appears to be a primary concern for ASIC, though the regulator doesn’t hold direct control over those providing property investment advice.

ASIC’s primary role in relation to SMSFs is to regulate the gatekeepers and providers of products and services to SMSFs – including brokers. Secondly, ASIC also regulates many (but not all) of the financial products that SMSFs commonly invest in.

“From that perspective,” said Kell “we are very keen to ensure that SMSF trustees are adequately equipped to make good investment decisions by being fully informed about the risks and returns.”

“We don’t want to be in a situation where in a few years’ time the question is asked, ‘how did you let people end up in this situation, why didn’t you stop that advice earlier?’” he says.

There are currently around half a million funds in the SMSF sector, managing roughly one third of the $1.5 trillion of assets in the super system – and that figure is expected to swell to $3 trillion by the end of the decade.

ASIC says the sheer size of the sector has it worried, but that activity triggered  by the fallout from recent collapsed investment schemes like Trio are also fuelling concern.

The regulator says it wants to prevent retirees and those nearing retirement from losing their life’s savings in the future.

In its report released in April, ASIC says the its noticed a rise in ‘aggressive advertisements pushing property purchases through SMSFs’.

The Rice Warner paper is just an extension of ‘on-going’ efforts, an ASIC spokesman said on Friday morning.

COMMENTS

  • by Keith B of the West 15/07/2013 10:00:30 AM

    ASIC once again making more noise. SMSF's are not for everyone but "property spruikers" have been around since Adam was a boy, it is just they come around with a different target market. Why isnt ASIC looking to tighten the rules that allows they activities to continue and flourish?

  • by SIDBROKER 15/07/2013 10:32:53 AM

    How long will it be before anyone in their right mind will want to do and write business for anyone with the way these and other public servants are running or rather ruining our democractic country and regulating on top of more regulaations. Lets let these academic guru`s come out into the real world for a while and work under their own regulations and see how long it is before they turn around and say no way i am not putting up with this and go back into their caves.

  • by Wayne 15/07/2013 12:16:27 PM

    Why is it only "dodgy propery spruikers in SMSF targeted when 98% of dodgy property investment "advice" happens outside of Super. If they were really that concerned they would regulate property investment advice.