Finance Brokers Association of Australia’s chief executive Peter White has held separate discussions with the assistant treasurer and the corporate regulator to attempt to bring key industry issues to the attention of government.
Speaking to SMSF Adviser’s sister title Mortgage Business, Mr White said the assistant treasurer shares his concerns over SMSF loans.
During a private dinner function in Canberra last week, Mr White admitted he was able to have “limited discussions” with Mr Frydenberg and gauge his feelings towards SMSF lending and other issues impacting the Australian mortgage market.
“We had a common thought process in regards to limited liability funding for SMSF loans,” he said.
“It’s a concern and if the data and analysis shows that it’s a growing concern then, depending on further deliberation on that, potentially things need to be done or could be done.
“Just because these loans exist doesn’t mean they should be there. It doesn’t mean they should go either, but it needs a proper thought process behind it.
“He [Frydenberg] is concerned about it.”
This follows Mr Frydenberg announcing the government intends to explore a “full range” of options when consulting on the Financial System Inquiry’s recommendation of banning borrowing in SMSFs.
“For example should personal guarantees by self-managed super funds trustees be banned?” he said.
“Should we be doing more to improve the standards of advice given to SMSF trustees considering leveraged investments?
“These are all important issues for the industry to continue to provide government with their views.”
If you can borrow in any other tax structure, then you should be able to borrow within super. I can go and invest in other warrant products that are available over shares or in internally geared products such as those offered by CFS or Perpetual.
The one thing they should do is ban personal guarantees to make the loans truly limited recourse. The banks have a huge buffer on most loans, don’t offer any discounts off their rates (generally) and still want a personal guarantee from trustees/members.
The problem with Mr White’s comments is that, like all the commentary about LRBAs, it is without any detail. What are these so-called ‘concerns’ and where do they come from? There’s not a single shred of evidence that LRBAs are causing any issue at all. Just a lot of supposition, much of which has already been proven incorrect (like the claim that they’re distorting the property market). Not sure what members of the FBA will think about Mr White’s efforts to close down a major source of borrowers either. Is that good for the membership of his organisation?