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‘Free’ SMSF services under regulator scrutiny
ASIC and the ATO are cracking down on SMSF services that are advertised as ‘free’ but end up locking trustees into long-term contracts.
Speaking at the Financial Advice in Super Symposium in Melbourne on Friday, ATO director of SMSF regulatory and income tax products Nathan Burgess warned against the proliferation of such services on the internet.
“ASIC are looking to a few people who have advertised [an SMSF service] as free, but when [the trustee] books in to it they are signing up for long-term service contract that is going to cost them a lot of money,” said Mr Burgess.
“It’s a challenge, because people might actually sign up without actually putting the thought through.”
The ATO is also set to become much more proactive in its monitoring of the SMSF sector, said Mr Burgess – including the online space.
“We’re paying a lot more attention to seminars, conferences, even what people are posting in bulletin boards [on the internet],” he said.
“We've noticed in those forums that while most people get it right, sometimes there's misinformation and we're starting to think we should play a role in there.”
These comments follow a warning from the SMSF Professionals' Association of Australia (SPAA) to trustees about free SMSF establishment services.
“It may be linked to an SMSF borrowing or may be used as a ‘catch’ for a more expensive ongoing service that locks you in,” said SPAA's Graeme Colley.
“Although establishing the SMSF may be free, the ongoing costs may be higher than what is available elsewhere in the market. Remember, too, some of these ongoing services may be available on a user-pays system,” he said.
“[Trustees] also need to consider the extent of the service, flexibility and depth of what is being provided as well as comparing the overall cost of administering the fund, and not just the cost of setting it up.”
Given the technological advances and productivity increase enabled by the internet it is not only inevitable but desirable for different business/pricing models to enter the market.
I think this "scaremongering" is simply the established players trying to maintain their high margins.
There is absolutely no reason that these economies of scale shouldn't drive down margins in the industry after all the savings go to the retirement of the beneficiaries.0- Some SMSF administration service providers offer free SMSF set up and very cheap annual admin and audit fees. However, when you read their Financial Services Guide they are receiving commission payments on bank accounts, term deposits, share trades, etc. They fail to make mention of these commission payments in their marketing material!! These commissions as a dollar amount are quite high over the year and would exceed the cost of paying an industry average annual fee for admin and audit.0
- anyone we know do you think ???0
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