Speaking to SMSF Adviser, John Hopkins Group managing director Michael Williams said despite the recommendation to ban limited recourse borrowing arrangements (LRBAs) in SMSFs in the final report of the Financial System Inquiry he is “confident they won’t ever be wound back”.
“I don’t think the government will spend the political capital to enable that to occur,” said Mr Williams.
The recommendation, he said, is only one of the 50 points put forward by David Murray and that out of most reviews only five percent of all recommendations are generally taken up.
Mr Williams said he would, however, like to see some further tightening in the LRBA space.
“I think there is still room for tightening in respect to loan valuation ratios or specific training requirements for advisers who give advice about LRBAs,” he said.
He also said ASIC should continue to look at organisations providing advice about LRBAs without the appropriate licensing in place.
“So within that space we’ve still got some room to play but I don’t think the talk about it being banned altogether will ever eventuate,” he said.
Great commentary Michael, I agree with your comments.
There is room for tightening – however with further consultation from the industry. A blanket ban is not a feasible solution and I don’t see it happening in the next two years under the current government, so we have time to consult and work through any change. I see a fall back solution being a tightening of LVR on off the plan purchases, however most lenders have already tightened their criteria.
I learned last year that trying to guess what legislative reforms will take place is a mugs game. And preparing for what “could” or “might” occur is a waste of human resources.
How about SMSFAdviser stop producing rhetoric which at best, counts for nothing. If it’s not legislated, it’s not worth your time.