IPA tells govt to address 'poor quality advice'
The Institute of Public Accountants (IPA) has used its pre-Budget submission to defend SMSF borrowing, calling on the government to stamp out “inappropriate advice” provided by unlicensed advisers instead.
Recommendation 5.27 of the IPA’s pre-Budget submission stated “That the recommendation to ban direct borrowings by an SMSF (as made by the Financial System Inquiry) be reviewed in favour of more targeted measures to address inappropriate use of gearing linked to poor quality advice.”
The IPA said it wants more in-depth consideration of the issue of SMSF borrowing before a decision is made on banning LRBAs.
“There is plenty of scope to tinker with the rules to specifically address all of the issues raised without resorting to a total ban.”
“The sledgehammer approach may not be appropriate to only rid the use of poor quality advice linked to SMSF gearing. There should be some analysis of ways to address the risks surrounding borrowing without imposing an outright ban.”
The submission also claimed that no case has been made or evidence presented, that there is a risk to the superannuation system as posed in the FSI Report.
In addition, the institute noted that no alternative measures were raised by the FSI other than an outright ban.
“For example, if they are worried about the diversification, then they can exclude this strategy for funds with small balances,” the submission stated.