ASIC has this morning released new guidance on SMSF advice, which deals in part with ASIC’s views on starting balances for SMSFs.
The information sheets are Information Sheet 205 Advice on self-managed superannuation funds: Disclosure of risks and Information Sheet 206 Advice on self-managed superannuation funds: Disclosure of costs.
INFO 205 and INFO 206 follow Consultation Paper 216, released in 2013, which outlined proposals to impose specific disclosure obligations on advisers giving advice on SMSFs.
According to ASIC, the new information sheets are intended to help advisers comply with their conduct and disclosure obligations under the Corporations Act and outline what ASIC looks at when undertaking surveillance in this area.
The guidance specifies the types of risks and costs that an adviser should consider, discuss then disclose to clients when providing advice on setting up, or switching to, an SMSF.
The information sheets also deal with the cost-effectiveness of an SMSF, “making clear” ASIC's view that an SMSF with a starting balance of $200,000 or below is unlikely to be in the client’s best interests, and that advice to establish one below that threshold is more likely to be scrutinised by ASIC.
“Setting up an SMSF is a significant financial step for consumers and many factors can impact their decision,” said ASIC deputy chair Peter Kell. “It is therefore important that consumers receive good quality advice that will assist them in making informed decisions about their retirement savings.
“ASIC wants to ensure that only those investors for whom an SMSF is suitable are advised to establish an SMSF and that our expectations around the standards of advice are clear,” he said.
“SMSFs are a key priority for ASIC and we will continue to target inappropriate advice about SMSFs in our surveillance work.”
The information sheets also provide “compliance tips” that indicate the factors ASIC is likely to look at more closely as part of surveillance activities.
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