In an email, the MFAA’s chief executive Phil Naylor indicated the Australian Securities and Investments Commission (ASIC) had raised broad concerns with the association about brokers’ involvement in SMSFs.
“As evidence about the concerns they’ve got, they recently cancelled the licence of a broker who was, without the appropriate licence, providing advice to clients about getting into an SMSF to buy property with finance,” Mr Naylor said.
“The problem there is he didn’t have the appropriate licence to do that, and he didn’t recognise that you need to have the involvement of other professionals in the field to do the whole process,” he added.
Mr Naylor told SMSF Adviser the MFAA had concerns approximately one year ago that draft regulation from Treasury was going to exclude brokers from the SMSF lending space. While this regulation did not proceed, the MFAA board decided to exercise caution around the issue.
“Our board decided that although it was important that brokers be involved in the SMSF lending space, that we should be cautious about that and make sure that any of our members that do get involved in that really do understand what they have to do, what they can’t do and the whole implication of being involved in the SMSF space,” Mr Naylor said.
The MFAA has since established an SMSF lending program, which promotes lenders to “SMSF lending specialist” upon completion of the course.
Despite ASIC’s focus on SMSF lending, brokers are increasingly integrating SMSF loans into their businesses, according to a recent industry survey conducted by SMSF Adviser’s sister publication The Adviser.
According to the survey, approximately 37 per cent of respondents looking to expand their offering over the next year identified SMSF loans as the product they would most likely begin to offer.
For the last SMSF loan I wrote I had to get signed documents from my clients Accountants, Financial Adviser & Solicitor (who were all involved in the whole process) to confirm my clients understanding of what he was doing. I just arranged the loan. Why is everyone panicking, surely we don’t need to go down the track that I can see ASIC & the the MFAA wanting to do (so they can charge us some more fees), like they have done with Reverse Mortgages, and require us to get another Licence or Accreditation.
Wonder what all of this new activity of broker involvement is doing to the PI insurers view of the risks faced and the effect it will have on future premiums. Will brokers who haven’t informed their PI Insurer of changes in their business practices be personally liable if the SMSF property deal goes belly-up?