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SMSF SoAs face issues with compliance: ASIC

The majority (62 per cent) of self-managed superannuation fund (SMSF) advice given by advisers isn’t compliant with the Best Interests Duty, and 19 per cent of clients receiving such advice are at risk of financial detriment as a result of the advice received.

Research by the Australian Securities and Investments Commission (ASIC), presented at today’s SMSF Association National Conference in Melbourne, was based on an independent study of 250 statements of advice given to SMSF clients.

ASIC’s senior manager, financial adviser, Kate Metz clarified to delegates that non-compliant advice wouldn’t necessarily have caused detriment to clients, but reminded them even should a client say they want an SMSF, it was their duty as advisers to make sure that was in their best interests.

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She said that some of the justifications given for SMSF establishment by advisers was just that “the client said that they wanted one”.

Advisers in the room felt that more guidance was needed from ASIC on what various obligations enforced by the regulator entailed however, with questions to this effect receiving resounding support from the crowd.

The 19 per cent of SoAs that showed advice potentially causing detriment did so as they had only recommended investment in one asset class, being property. Consumer research by the regulator had also found that some consumers concernedly thought that buying multiple properties amounted to diversification.

The same research also found that a concerning level of consumers didn’t understand essential factors to the operation of the SMSFs.

Around 30 per cent believed that they did not need an investment strategy for their fund, with the same amount thinking that they were entitled to compensation should their fund be subjected to fraud. A further 19 per cent had not considered their insurance needs.




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The scary thing is that ASIC's research was based on SoAs prepared by licensed advisers. Only a tiny proportion of SMSF advice is actually delivered this way. Most SMSF advice is provided verbally by unlicensed accountants and property spruikers.

ASIC should be devoting far more resources to stopping unlicensed advice from these totally conflicted and largely incompetent sources. It is where the biggest damage to Australian consumers' superannuation is being wrought. Much worse than anything AMP or NAB has ever done.

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