Adviser tips SMSF borrowing to stay
The government will not risk “political capital” by banning LRBAs outright, according to the managing director of a boutique advice firm.
Speaking to SMSF Adviser, John Hopkins Group managing director Michael Williams said despite the recommendation to ban limited recourse borrowing arrangements (LRBAs) in SMSFs in the final report of the Financial System Inquiry he is “confident they won’t ever be wound back”.
“I don’t think the government will spend the political capital to enable that to occur,” said Mr Williams.
The recommendation, he said, is only one of the 50 points put forward by David Murray and that out of most reviews only five percent of all recommendations are generally taken up.
Mr Williams said he would, however, like to see some further tightening in the LRBA space.
“I think there is still room for tightening in respect to loan valuation ratios or specific training requirements for advisers who give advice about LRBAs,” he said.
He also said ASIC should continue to look at organisations providing advice about LRBAs without the appropriate licensing in place.
“So within that space we’ve still got some room to play but I don’t think the talk about it being banned altogether will ever eventuate,” he said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.