ASIC should withdraw its SMSF factsheet
The Australian Securities and Investments Commission (ASIC) should withdraw its Self-Managed Superannuation Fund (SMSF) factsheet because it contains “an array of seemingly deliberate inaccuracies”, according to economist, David French of the Investment Collective.
According to French, he has identified four glaring inaccuracies “so blatant that that the factsheet could only be described as misleading and deceptive”.
He said those inaccuracies included ASIC’s claim that the average cost of running an SMSF was $13,900 per annum and that it takes more than 100 hours per annum to run an SMSF.
French ascribed many of the inaccuracies to ASIC’s reliance on the Productivity Commission (PC) and noted that ASIC had made no attempt to explain that the PC’s data around the costs of running an SMSF had been distorted by the costs of some very large funds.
He said that the suggestion that it takes 100 hours a year could only have been derived from including portfolio management tasks.
“ASIC knows it's on shaky ground in reporting PC return figures for SMSFs. That's why it has included a footnote to cover the inadequacies of the data. As ASIC would know, the PC data revealed that returns from SMSF's overall, exceeded those of either industry or retail funds,” French said.
“Regardless, the data used in the PC analysis is in turn based on data from the ATO. Such data is distorted by any number of factors peculiar to the individual fund and is not suitable for the calculation of performance figures.”
“In particular, many investors are conservative by nature and they often prefer higher weightings of lower-risk assets,” French said. “In our experience, the asset allocations of public offer funds often cannot be relied on to provide a clear indication of the characteristics of the underlying investments, and consequently people use SMSF’s to gain certainty.”
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
