ASIC penalises firm for ‘free’ SMSF set-up claims
An SMSF service provider has paid an infringement penalty after making “potentially misleading” statements about the cost of setting up an SMSF.
Your Super Accountant has paid a $2,040 infringement notice penalty after making claims on its website about the cost of setting up an SMSF using Your Super Accountant's administration services, ASIC said in a statement released earlier this week.
The representations on the website's homepage were that fund set-up was free, ASIC said, and the homepage did not disclose any conditions.
ASIC was concerned that a fund set up using a corporate trustee was not free “under any circumstance”.
ASIC was also concerned that although promoted as free, the conditions for fund set-up required investors to pay $200 upfront – 20 per cent of the annual administration fee – to be eligible for ‘free’ fund set-up.
“Some terms and phrases – such as ‘free’ – have such a strong connotation for consumers that particular care should be taken so that investors are not misled,” said ASIC’s deputy chair Peter Kell.
“ASIC has a particular focus on misleading claims that a financial product or service is 'free', as this may lead consumers to make inappropriate financial decisions.”
Speaking previously to SMSF Adviser, Paramount Wealth Management’s principal Wayne Leggett said offers of a free SMSF may not have upfront costs, but inevitably “there has to be a catch somewhere”.
“Let’s be clear: it costs money to set up an SMSF. The time it takes, whoever does the work, has to be factored in somewhere,” he added.
“So, if someone is offering you a 'free SMSF', common sense would tell you that while you may not be paying for it upfront, you are, inevitably, paying for it somewhere.”
Also speaking to SMSF Adviser, The SMSF Academy’s managing director, Aaron Dunn, said a ‘free SMSF’ is an example of “putting the product before the advice”.
“We’ve been critical of property spruikers targeting the SMSF industry and potentially exposing individuals not suited to running an SMSF. Surely this type of offer must also raise some concerns about the right type of SMSF candidate,” Mr Dunn said.
Aaron Dunn will be speaking at the 8th Annual SMSF Adviser Strategy Day. For more information,