The Institute of Chartered Accountants Australia (ICAA) has announced that a review of SMSF borrowing is “overdue” as the Reserve Bank of Australia (RBA) and the corporate regulator said they are closely monitoring property investment in SMSFs.
Addressing mounting concerns related to borrowing arrangements is “crucial” to the strength of the SMSF sector, according to the ICAA.
“In 2010, the Cooper Review found that borrowing was not consistent with Australia’s retirement income policy and a review was needed within two years,” said ICAA head of superannuation Liz Westover.
“This review is now overdue. The industry needs it to happen in order to identify what changes may need to be made to the current policy settings around borrowing within SMSFs.”
The ICAA statement comes as the Reserve Bank identified gearing in SMSFs as an area where Australian households “could be starting to take some risk with their finances”.
In minutes from the September 3 board meeting, released earlier this week, the RBA noted that this development would be “closely monitored” by the central bank.
Speaking at the ICAA National SMSF Conference in Melbourne this week, ASIC Commissioner Greg Tanzer said over-leveraging is a concern for the regulator.
“The concern… is the potential for it to be used as part of a marketing technique targeted at people close to retirement. For this reason, ASIC is specifically looking at marketing activity for leveraged investing in property in SMSFs,” he said.
Speaking to SMSF Adviser, Mr Tanzer said ASIC has a “very active campaign” which examines advertising targeted to SMSFs, particularly concerning real property investments.
“We’re looking to see whether or not that advertising is misleading and deceptive, and that’s something that we’re particularly targeting at the moment and I think you can expect to see that there might be some actions that flow from that over the coming months,” Mr Tanzer said.
“There’s a number of matters under consideration,” he added.
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