ASIC concerned by ‘off-road’ SMSF trustees

ASIC has expressed its concern at a Parliamentary Joint Committee hearing about trustees who don’t understand the magnitude of responsibility they’re undertaking by establishing an SMSF outside of certain regulated protections.

Last week, the executive leadership of ASIC appeared before the Parliamentary Joint Committee on Corporations and Financial Services.

ASIC’s chair Greg Medcraft expressed concern for those SMSF trustees who don’t understand what they’re “taking on board” by setting up an SMSF.

“Regulation comes with protection because if the money is lost because of fraud, there is compensation because that is the deal. If they go off road, it’s individual responsibility,” Mr Medcraft said.

“I do think it’s really concerning that people don’t often understand what they’re taking on board and that they need to think about the time [involved], they need to think about their own skills to take it on, it’s really important.

“The big thing I’d like to emphasise is [the] level of personal responsibility when you become a self-managed super fund –  you take personal responsibility for managing that fund, and it’s important.”

ASIC commissioner Greg Tanzer suggested ASIC is set to announce the outcome of Consultation Paper 216 in the near future, which proposed additional disclosure requirements for advisers with prospective trustee clients.

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