ASIC probing quality of SMSF advice

The Australian Securities and Investments Commission (ASIC) has confirmed that Self Managed Superannuation Fund (SMSF) advice is now firmly in its surveillance sights, including whether the Future of Financial Advice (FOFA) best interest test is being applied.

At a time when the major industry superannuation funds are continuing to complain that members are being inappropriately directed towards SMSFs, ASIC Commissioner, John Price has told a risk management forum that the regulator “will test the quality of advice to consumers who have set up self-managed superannuation funds”.

“This includes compliance with FoFA best interests and related obligations,” he said.

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However, the ASIC commissioner pointed to the fact that superannuation funds would also be under scrutiny with respect to the advice they provided, noting that while the regulator would continue to examine the practices within the major banks it would also looking at those within superannuation funds.

“We are continuing to look at the quality of financial advice,” Price said. “This year, we are focusing on advisers who we have identified as having a high risk on non-compliance from our previous review of the big five financial advice firms. We are also looking at firms’ programs for remediating consumers, including in relation to the provision of non-compliant advice and for fee-for-no service breaches.”

He said that ASIC was also reviewing the breach reporting practices in large banks and that with respect to the insurance sector it was reviewing the selling practices within the direct channel for life insurance and insurers’ governance for the design and distribution of add-on insurance products available through car dealerships.

Looking at the superannuation and managed funds sector, Price said ASIC would continue to focus on disclosure practices that might mislead investors and consumers or affect their understanding of the risks, fees, costs, features and performance of financial products and services.

“We will review higher-risk responsible entities and superannuation entities, focusing on their culture, incentives and compliance arrangements,” the ASIC commissioner said. “We will also review the practices of superannuation trustees, including the provision of advice, fee-for-no service, and disclosure of benefits and inducements.”


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Seems that if you disclose everything then you are fine with ASIC. But really the end result of the advice is the key determinate for good advice, not whether you have dotted every i and crossed every t.

ASIC has this ass about excuse the language. Go to the Trustees - ask them who told them to set up the SMSF, then you will find the unlicenced ones operating on the edges. Lots of the SMSF's around have been opened with the wink and nudge with no paperwork provided by that person that recommended it. There are some geared up SMSF in certian cities ie Perth right now just starting to hurt, if they get burnt ( property prices fall banks revalue the security the SMSF goes over the max gearing levels for example) all hell will break loose.

That CLUB in Perth does not give advice and neither does the Squirrel in Sydney who is spruiking SMSF to buy property with as little as $120k because their fees are so low and the list goes on and on............

My accountant told me to do it. but I'm happy. he said if I make a negative return this year and another next year and if the market keeps going backwards eventually I won't have any money and so I need to take CONTROL....but it was my decision to make he said.... he also said but i would be an idiot if I stayed invested in Australian Super he said...and everyone is doing it he said.. so one day after a 10 minute tax return I had a SMSF deed and now I am running my own super fund and happy with term deposit rates of 2.5% as with my money running down it allows me to get the full age pension and meets my goal of eventually being homeless...but i am in Control.

Haha, too right old bob. The accountants never set these things up, they never recommend them, they just provide you with 'factual' information and act on your 'directions' only. No licensing required because they are the trusted, no-advice provided advisers.

I agree with ASIC - I've seen many examples of poor advice with respect to SMSFs.

Interesting they never look at advice by ISA to consolidate super even if it means losing insurance benefits... Why is that?

There is no SOA. So ASIC can't even look at it. I have yet to hear how ASIC can review call centre advice.

Besides call centre's are not biased or paid bonuses, so they have to be OK, and there is no need to even consider looking over the quality of advice.

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