The Association of Superannuation Funds of Australia (ASFA) has called for mandatory AFS licensing for practitioners involved in the sale of investment products to SMSFs.
In a statement released this week, ASFA chief executive Ms Pauline Vamos said the association has become increasingly concerned about the growing number of people being targeted by schemes which offer attractive incentives at the expense of long-term good retirement objectives.
“Such schemes run the risk of falling foul of the sole purpose test that applies to all SMSFs. As well, provision of large incentives indicates that a property is not being sold at a fair market price,” she said.
“With more and more people entering the SMSF sector each day, it's critical the regulators address the growing concern the community has around its governance, and ensure professionals working in this area are licensed appropriately.”
ASFA said the licensing – or lack thereof – of the SMSF sector is a major concern, given reports of SMSF members being “offered luxury international holidays in exchange for buying property through their fund”.
Similarly, the Superannuation Professionals' Association of Australia has called for more stringent licensing requirements in relation to limited recourse borrowing arrangements.
“We wanted limited recourse borrowing to be a licensed product under the Corporations Act,” SPAA’s Jordan George told SMSF Adviser.
“Making limited recourse borrowing itself as a financial product would provide more certainty around licensing and who can advise on the investment strategy.”
The calls follow the Property Investment Professionals of Australia’s (PIPA’s) persistent lobbying for property to be classed as a financial product when the purpose of sale is for investment.
Ben Kingsley, chair of PIPA, previously told SMSF Adviser this would be a positive move, providing “better protection for trustees of SMSFs”.