ASIC outlines ongoing SMSF enforcement work

The corporate regulator has outlined its current and ongoing enforcement work in the SMSF sector, with unlicensed SMSF advice and misleading advertising under the spotlight.

Unlicensed property advice continues to be on the Australian Securities and Investment Commission’s (ASIC’s) radar, said commissioner Greg Tanzer in a speech at the Tax Institute National Superannuation Conference.

“Let me be very clear: a person requires an AFS licence if they recommend that a member of an SMSF purchase a property through their SMSF,” Mr Tanzer said.

“Where we see examples of unlicensed SMSF advice we will be taking regulatory action.”

Mr Tanzer said ASIC has also seen a rise in SMSF advertising, including some that is misleading and deceptive.

“Particular problem areas we have seen include misleading or deceptive statements about SMSF fees, returns and risks,” he said.

“We strongly encourage all SMSF advertisers to carefully review the content of their advertisements against our good practice guidance.”

Several matters concerning misconduct in the SMSF sector are also subject to ongoing enforcement, Mr Tanzer said.

Misconduct often involves recommendations to retail investors to establish a self-managed fund, typically leading to the investors switching from their APRA-regulated fund to an SMSF, he said.

Other instances involve direct and random marketing, including cold calls, with the aim of establishing an SMSF or investing funds.

“Where misconduct occurs, it is common for high returns to be promised, be that in relation to the ability of the SMSF to generate an overall portfolio return or in relation to a specific investment recommended to the SMSF,” Mr Tanzer said.

“In the right hands, SMSFs can be very effective retirement savings vehicles. In the wrong hands, however, SMSFs can be high risk.”

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