Addressing the House of Representatives standing committee on economics, ASIC chair James Shipton reviewed the coming role ASIC will play for the year, but also highlighted the regulator will be more receptive in addressing the various criticisms it has faced over the years.
Mr Shipton pointed out to the regulator’s failings when developing the SMSF fact sheet, which attracted attention from the time of its release in November 2019 for stating the average cost of running an SMSF was $13,900 and required about 100 hours of time each year.
“We acknowledge that disclosing only the average cost of running an SMSF in the fact sheet that was distributed as part of the pilot was not sufficient, even though, at that stage, this was the only cost figure available to us,” Mr Shipton said.
“We regret failing to seek a median cost figure before distributing the fact sheet.”
In a fact sheet released in October 2019, ASIC had expressed concerns that a growing number of investors are setting up SMSFs when they are inappropriate for their circumstances, and that not everyone can meet the significant time, costs, risks and obligations associated with establishing and running one.
ASIC deputy commissioner Danielle Press had said SMSFs may be an attractive option for investors wanting more control over their superannuation investment strategy, but it requires real skill, care and diligence to manage your own superannuation.
“SMSFs are not for everyone simply because not everyone can meet the significant time, costs, risks and obligations associated with establishing and running one,” she said.
But the fact sheet is understood to have been met with widespread surprise, confusion and shock by industry experts.
The SMSF Association had rejected ASIC’s $13,900 cost figure and suggested the cost was closer to $5,000, and soon after, the released ATO SMSF overview for 2017–18 had further clarified the figure.
The fact sheet was then grilled at the House of Representative committee, with MP Tim Wilson notably demanding that ASIC retract, correct and replace a fact sheet claiming the average SMSF requires $13,900 and 100 hours a year to run.
“Of particular concern is ASIC’s claim that it costs $13,900 annually to run an SMSF has been revealed to be sheer fantasy, as this figure includes investment and interest expenses,” Mr Wilson said.
“The fact sheet contains a number of absurd claims from ASIC, including that the cost of financing a loan for investments amounts to an administrative cost, and that more than half the maximum annual concessional contribution of $25,000 is spent on administration. It simply lacks logic.”
This comes as, recently, SMSF Association deputy CEO Peter Burgess said there are several figures being quoted out there about how much it costs to run an SMSF, but there are limitations when it comes to understanding the complete picture. The SMSF Association has flagged that it will seek to continue to develop more processes when measuring SMSF data and determining its operating cost.
Misleading conduct at its finest.
So who is regulating the regulator???
Bureaucrats who live in the Canberra bubble and whose super is managed by a third party could also be totally unaware of reality. This is the same bunch which has mandated electronic application for a Director ID (DIN). 90% of physical Australia does not have mobile phone coverage, I suspect internet access is about the same. And it seems I am not permitted to lodge an application for a DIN for a client; it must be lodged personally, however that can be monitored…
ASIC also fail to mention that it costs consumers $13,600 pa to invest $1.6 million in the CBUS Growth Super Fund.
I agree with Michael. ASIC must use meaningful data and ask a simple question: “does our advice make sense?” It’s time to lead in the big data world and do not look for an excuse. We need a better data-sheet for SMSF. Your advice impact people financial decision on establishing their retirement strategy. We need a red carpet for people working towards these goals and not a red tape!
ASIC and their best buddies Industry Super will attack SMSF at every option.
This fact sheet followed Labors loss at the unlosable election as a way for Industry Super to attack and try to counter SMSF popularity and the lack of Unions getting their tickets clipped and these monies.
It coincided with ATO attacking SMSFs with LRBAs that were 90% or more in property.
As per my SMSF, whilst we add $30k+ pa in contributions and diversify investments. The success of the LRBA property keeps growing to be the major asset. Terrible result the property has returned so well 🙂
Both attacks highlight yet again ASICs REGULATORY CAPTURE CORRUPTION IN SUPPORTING ALL THINGS INDUSTRY SUPER at expense of SMSF and Real Advisers.
ASIC need to be held accountable !!!!
ASIC need Adviser oversight. And Adviser led enforceable undertaking.
Disgustingly corrupt ASIC
Idiots. Again.
Really???
The ATO has a database.
CLASS and the like have a database.
Any of these will provide a range and avergae over a large enough pool to be meaningful.
You could also easily identify types of SMSF by accumulation versus pension
Geared versus ungeared.
Those that include real estate and those that don’t.
Those who are skewed towards a particular type of investment, i.e. term deposits, fixed income, shares, other.
Only bureaucrats who don’t really want the answer could come up with ways of making this task hard.