The SMSF administration market should be licensed under the AFSL regime, according to the founder of CleverSuper’s controversial ‘free SMSF’ offering.
In an exclusive interview with SMSF Adviser to be published in the upcoming February print edition of the magazine, CleverSuper chief executive Chris Appleyard said the SMSF administration market is in need of “revolutionising”, particularly on the regulatory and licensing fronts.
Mr Appleyard said greater “disclosure and consumer protection mechanisms” are required in the SMSF administration market, and that making SMSF admin tools beholden to an Australian Financial Services Licence may be an appropriate course of action.
“If it looks and feels like a financial service or product, it likely is,” said Mr Appleyard, who licenses his SMSF admin business, CleverSuper, as an authorised entity of his financial planning dealer group business, Custom Wealth Solutions.
As well as a lack of appropriate licensing requirements, the SMSF administration market is plagued by conflicts of interest, Mr Appleyard said, whereby larger vertically integrated institutions can use the tools to restrict the number of financial products available to trustees.
“SMSF admin providers have the ability to simply say ‘we cannot support that fund, or that product’,” he said.
“Similar to a mastertrust or wrap, if the product is not available on the platform then it‘s simply not possible. [This] is worrying because anyone who chooses to have an SMSF is doing it to have more control over the products it can use.”
Describing this ability for SMSF administrators to restrict product choices as “back to the future”, Mr Appleyard said a paradigm shift was needed and that the “$20 billion” in fees paid to SMSF administrators is unnecessary.
“The message needs to get out there [on] prime time television so that [SMSF trustees] know they don’t have to pay fees anymore,” Mr Appleyard said.
“They can take back control and manage their investments their own way and make all these industry people – advisers, banks, institutions – make them all compete for their business and disclose what they are providing, rather than giving it by default.”
Version 3 of CleverSuper – which has previously polarised SMSF Adviser readers – will be ready for launch by mid-2014.
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