ASIC’s persistent warning shots over one-stop shops are warranted, according to Mr Ripoll, who believes clients are receiving poor and conflicted advice from operators who house multiple related services under one roof.
“What frightens me in the current financial services world, if we’re talking about SMSFs, is this rise of these one-stop shops, where you go see a particular person, who immediately advises you to set up a SMSF specifically for the purpose of buying a property, specifically for the purpose of buying their property in-house, and specifically for them giving all the advice,” Mr Ripoll told SMSF Adviser.
“With lots of those that we see, and I deal in some consumer affairs areas here, is people who were advised into these structures were definitely not suited. They got very, very bad advice and end up paying and losing a lot of money because of it,” Mr Ripoll said.
Mr Ripoll called on SMSF professionals to call out dodgy operators, particularly given their potential to impact unsophisticated investors.
“Everything and anything that we can do, whether it’s accountants or financial advisers, they should be calling out those who actually give everyone else a bad name and really hurt ordinary people,” Mr Ripoll said.
“I’m quite passionate about that because I think not only the world has changed, the industry and the sector [have] changed, and the availability for complex products to be sold to people when they really don’t need them, I think is a really big risk. We ought to do everything we can to minimise that risk,” Mr Ripoll said.
Mr Ripoll, formerly a Labor minister, retired from federal politics prior to the general election in 2016. Under the Rudd government, he chaired the 2009 Inquiry Into Financial Products and Services in Australia, which made way for the FOFA reforms. He is currently director at Map My Plan, an Australian fintech company which provides advice services to consumers.
katarina.taurian@momentummedia.com.au
100% agree. Warning shots are useless
All regulators need to step up. My pet peeve as an adviser that is advising clients on SMSF matters (strategy, pension setups TBC, CGT relief ,contributions etc) the administration is not complete or up to date.
In the past year I have seen administrators (who charge their clients up front monthly fees) miles behind in their reconciliations and updated investment member records. Given my responsibility as a planner to the Trustees I have placed the administration with a small local SMSF administration firm & paid for the administration costs. I am now in discussion in getting back 2 years of fees from the previous administrator.
This is an industry wide problem. Recently it was reported that lodgements for FY17 accounts (the important year for all the super reforms) were around 65%. So where are the regulators.
These administration services are issued under AFSLs yet ASIC is considers administration not to be a product. Matter has been referred to ACCC who verbally recommending contacting ASIC.
The Tax Practitioners Board is a toothless tiger. They just continue to issue extensions
Its just another messy problem for the industry and needs to be rectified with action from all regulators
The article seems to imply that the problem is caused by SMSF professionals (me and my ilk) not “calling out” dodgy operators. I think the problem has more to do with a lack of nimble, effective enforcement. Once an operator is reported to ASIC, in practice, how long does it take to shut them down? All I can do is raise my concerns with the regulators. They are responsible for enforcement. Continually firing warning shots doesn’t strike me as an effective mechanism to protect the public.
But regulation is pricing others out of providing SMSF advice.
Some-on saying what we all knew the problem is:
“conflicted advice from operators who house multiple related services under one roof”.
Why is it then that there’s rules that try and make accountants to be financial advisors. Client’s best interest duty is bulldozed into the ground when this is done.
Please let accountants be good accountants and support us in doing a good job.
ASIC removed the accountants exemption and encouraged accountants with no financial planning background to enter the space, it was a very dangerous idea and we are now seeing a few negative views coming out in media. I predict further issues will arise with trustees either reporting a reduction in tax advice as accountants are gun shy or misleading and ill conceived advice from pop up accountants come planners.
Bernie’s message has a ring of truth. The problem is Bernie has form on appearing friendly to the industry before aciting in the interests of Labors mates-the industry funds.All of Bernies mouthing over the years were designed to protect his mates e.g. the disaster that is group default cover
Spot on here. Another swipe at SMSFs by the Industry Fund fan club (AKA Unions).
The laughable thing about Mr Ripoll is that he has a role in a Fintech, the very platform of choice for the one-stop shop (AKA property sprukers) to provide non-property investments for the small portion of the portfolio that isn’t property.
Spot on Bernie.
Agree