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ICAA questions ASIC’s CP 216 proposals
The Institute of Chartered Accountants Australia (ICAA) has responded to ASIC’s push to increase disclosure requirements for SMSF practitioners, questioning if the proposed measures are too “narrowly focused.”
The ICAA recently issued a submission to the corporate regulator in response to Consultation Paper 216 –Advice on SMSFs: Specific disclosure requirements and SMSF costs (CP 216).
While the ICAA stated it broadly supports measures that will enhance information given to trustees, it also questioned whether the consultation’s proposals are “narrowly focused” in the wrong area.
“As advice is not a requirement for those considering an SMSF we must ensure that anyone, regardless of whether they seek professional advice or not, are aware of certain issues and considerations prior to setting up an SMSF,” the ICAA stated.
“We believe the greater risk of awareness of the responsibilities for potential SMSF trustees lies not with the provision of advice from financial advisers and professionals but with those who are not seeking any advice or receiving advice from non-professional and unregulated sources.”
Responding to the proposal to require practitioners to warn clients about the lack of statutory compensation for SMSFs, the ICAA stated this warning already exists within the ATO’s trustee declaration form, and that additional information could be “overwhelming.”
“We therefore caution that proceeding with the inclusion of this disclosure may not achieve its objective,” the ICAA said.
The ICAA also stated that if it is ultimately deemed appropriate to include specific compensation disclosures for SMSFs, then it is “warranted” that similar disclosure for other types of funds should also be included.
“It is not appropriate to ‘warn’ SMSF trustees about the lack of access to a statutory compensation scheme without discussion on how the scheme applies to other types of superannuation funds,” the ICAA stated.
“In order to provide a balanced, educational and useful disclosure, potential trustees should also understand that being a member of an APRA-regulated fund does not guarantee they will be covered under the scheme in the event of a fraud.”
The institute has also said it encourages “appropriate consideration” from ASIC before further compliance is required from advisers.
“We caution that the proposed requirements appear to respond to issues that are not systemic in nature,” the ICAA stated.
“Whilst ASIC’s findings in its recent review of SMSF advice noted that there was room for improvement in some areas, most advice was found to be adequate. This is despite the fact that the pieces of advice being reviewed were considered to be high risk.”
The SIS Act was set up so that all funds were to be treated equally. The longer this has gone, the SMSF sector finds it stuck with increasing regulation for looking after THEIR OWN MONEY. There seems little pressure on the larger funds to be more accountable, for example, a statement of fees and costs that is consistent and easily understood and comparable. There appears to be no compensating benefit for an SMSF, except increased unwanted regulation with resultant increased cost. I wonder who wants to benefit from that???
If additional regulation is expect in some areas, lets have some offsetting benefits in reduced regulation elsewhere. Where is the Govt that promised less red tape for a business.
A company that turnsover $15m employs say 80 people has less regulation on their accounts and no requirement for audit with a lot more stakeholders to be responsible to. A SMSF with $1m and just mum & dad has ten times the regulation.0- ASIC is a regulator. There are over 400,000 SMSFs. It would seem efficient if ASIC prepares a standard advice docuement and then puts it on its website for public view. The ATO could then send this by email to all new regstrants for a SMSF ABN. This email could be automatic.
Getting advisors to prepare these standard advices just leads to administratice nightmares and non comliance. The mess with SOAs is a clear example of poor administrative thinking.0
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