The Labor Party has been urged to rethink its policy of banning Limited Recourse Borrowing Arrangements (LBRAs) following its election defeat.
Specialist commercial and SME property lender Thinktank said there was minimal evidence that LBRAs were a systemic threat to the superannuation system. A ban could adversely affect SMSF trustees who use them as part of their retirement strategy as it would limit their capacity to invest in a particular property.
Chief executive of Thinktank, Jonathan Street, suggested Labor review the proposal to help small businesses. The Federal Government has already stated it will ask regulators to review LRBAs over the next three years.
“If Labor wants to reach out to the small business community, in particular, taking the abolition of well-managed, well-regulated LRBAs off the policy table would be an important step in that direction.
“Instead of focussing on the errant behaviour of a minority who haven’t acted in their clients’ best interest, Labor should appreciate how LRBAs play an important role in the self-funded retirement plans of so many self-employed families.
“The legislation is already there to crack down on those doing the wrong thing. All that’s required is for the regulators to effectively enforce the law.”
