The SMSF Association has backed the draft legislation that seeks to outlaw hawking of financial products.
In a submission to the Financial Services Reform Taskforce, the association said financial products should not be treated as commodities in a “sales culture” and should only be offered when an individual sought advice or had inquired about products that would benefit their financial wellbeing.
The SMSF Association’s chief executive, John Maroney, said the legislation would prevent property spruikers using self-managed superannuation funds (SMSFs) in a “one-stop property shop”.
“Inappropriate advice provided by these shops, as well as other unscrupulous advisers, has long concerned the Association. Although we believe its prevalence across SMSF sector is low, the detrimental effect on any individual SMSF member can be very significant,” he said.
“This advice model typically occurs when a property spruiker sources a property, organises financing and a client’s SMSF accounting and audit services either for a commission or ongoing fees.
“These businesses have inherent conflicts of interest, lack specialised advice and SMSF skills, and take advantage of customers with limited knowledge of SMSFs. Property seminars are the main source of this unscrupulous behaviour.”
Maroney noted the draft legislation needed to allow individuals to be informed about SMSFs when they genuinely inquired about super and retirement products.
He said while SMSFs were not for everyone, it played a key competitive role in super and raising barriers to establishing one would be detrimental to consumer outcomes.
“A key competitive pressure that SMSFs contribute is providing flexibility and adaptability to cater for unique circumstances and as such we believe individuals should be given the ability to engage and manage their retirement savings in ways that best suit their retirement goals,” Maroney said.
“This is particularly important, not only to financial advisers but many accountants who are trusted advisers in the SMSF sector.”