ASIC action on alleged SMSF property spruiker welcomed
Actions taken by ASIC in the NSW Supreme Court to prevent a property promoter from providing unlicensed financial product advice on SMSFs has been applauded by the SMSF sector.
As reported in SMSF Adviser on Tuesday, ASIC said it understands Park Trent advised at least 500 members of the public to establish and switch funds into an SMSF which were then used to purchase investment properties owned or promoted by Park Trent companies.
In a public communication, the SMSF Owners Alliance said setting up an SMSF to borrow heavily to invest in a residential property so the fund contains one highly-geared asset is risky and would generally not be considered a sensible strategy.
“The motivation for setting up an SMSF should be to save for a financially secure retirement and people contemplating doing so should consider consulting an accredited financial adviser,” said the SMSF Owners Alliance.
SPAA chief executive Andrea Slattery said spruiking activities undertaken on the fringes of the SMSF sector, “can unfairly distort perceptions of the sector”.
“It is positive that ASIC, as the regulator of financial advice, is playing its role in stamping it out,” she said.
“Property as an asset can form part of an investment strategy for SMSFs, but should be considered along with other factors as part of a diversified portfolio that allows trustees to meet their long-term retirement goals.”
Ms Slattery argued anyone thinking about establishing an SMSF or putting together an investment strategy should seek specialist advice first.
“SMSFs are a proven vehicle for Australians to become more engaged with their superannuation, but it is important that the right safeguards are in place to protect the integrity of the sector,” she said.
“This announcement by ASIC is an important step in that direction.”