A number of financial planners are being approached by SMSF trustees to sign off on borrowing strategies, according to delegates who attended the Boutique Financial Planners’ annual conference in Brisbane last week.
Such plans could be initiated by larger institutions that would be providing the finance, some delegates suggested.
ASIC senior manager, financial advisers, Trevor Clarke said he will ensure this activity is being captured by the SMSF taskforce.
Mr Clarke also suggested borrowing strategies that do not prioritise the clients’ best interests and are built on the “wrong foundations” could constitute a breach.
This follows warnings from senior lawyer at The Fold Legal, Lesley Thorne, who said financial advisers and accountants who provide certificates for LRBAs could be breaching the National Consumer Credit Protection Act 2009.
“Unless the adviser or accountant holds an Australian Credit Licence or is a Credit Representative of a licensee, it is an offence to provide ‘credit assistance’ or ‘act as an intermediary’ in relation to consumer credit,” Ms Thorne said.
“This means that if the client’s loan is consumer credit and the adviser or accountant isn’t licensed or authorised, they can only provide the client and their lender with factual information.”
Ms Thorne explained that where the trustees of an SMSF are individuals, an LRBA will be consumer credit if it is to purchase, renovate or improve residential property for investment purposes.
interesting
Lenders are looking to shift liability – however in many instances the banks will refer the SMSF trustees to a bank aligned adviser. In the case of one bank the fee charged by the aligned adviser to sign of the forms is $3000
Laurie,
I’ll respect your point. I haven’t necessarily seen those forms. If the Banks are asking same then comment 2 “Getreal” has resonance. I’d just refuse to sign off to the advice if uncomfortable and refer them back to their “big lender” I can’t see where the pressure lies if you are operating under an non bank aligned AFSL
The days of the banks demanding clients go get advice / sign off of an LRBA are over…….
[quote name=”Moonae”]Planners do not need to sign off to the suitability of the advice they just need to advise the clients as to the implications of the path they have taken. There is no responsibility for the strategy, asset class or the investment quality of the asset itself. I get it. Financial planning is built around fundamental steps which the SMSF process regularly avoids. But, lets get real here. It is simply a case where Planners are looking to assert their role in the process which SMSF threatens. It is not a case of Planners “genuine concern” about the advice and asset class decisions of SMSF trustees themselves. That is a furphy.[/quote]
You obviously don’t understand that the lenders are trying to get someone else to accept the liability if this goes pear shaped for the client. Try reading the forms that the banks want signed. We have a licensee have laid down very specific rules on how our advisers must act in this area.
If it’s not such a big issue of liability, then why don’t the big banks get their own planner network to sign off on the advice?
Planners do not need to sign off to the suitability of the advice they just need to advise the clients as to the implications of the path they have taken. There is no responsibility for the strategy, asset class or the investment quality of the asset itself. I get it. Financial planning is built around fundamental steps which the SMSF process regularly avoids. But, lets get real here. It is simply a case where Planners are looking to assert their role in the process which SMSF threatens. It is not a case of Planners “genuine concern” about the advice and asset class decisions of SMSF trustees themselves. That is a furphy.