Guidance on SMSF advice released by ASIC yesterday has been applauded by industry groups, with the guidance expected to improve disclosure consistency and the standard of SMSF advice.
Speaking to SMSF Adviser, AMP SMSF's head of policy, technical and educational services, Peter Burgess, said that although many SMSF advisers already disclose risks in their statement of advice, the release of the information sheets and the practical compliance tips “introduces an expected minimum level of SMSF risk disclosure”.
“This will ultimately help to ensure disclosure consistency and a higher standard of professional advice being provided to SMSF clients and prospective SMSF clients,” said Mr Burgess.
“Rather than imposing generic disclosure requirements by class order, which was canvassed in Consultation Paper 216, the information sheet approach recognises that the importance and relevance of SMSF risks can differ depending on the specific circumstances of the client.”
Mr Burgess said this will result in set of disclosures that have been informed by ASIC surveillance work and can be tailored to the individual circumstances of the client.
The SMSF Association said it too was encouraged by the guidance from ASIC since it provides an indication of what the regulator is looking for when advice is provided on superannuation.
SMSF Association director of technical and professional standards Graeme Colley said the guidance will also inform consumers on what they should expect from their adviser in relation to the level of advice given and what to think about if they do not have a balance greater than $200,000.
“You’ve got to use common sense whenever you’re providing advice on anything finance-related but what ASIC is doing is just setting down what those common sense rules are,” said Mr Colley.
The guidance is most likely a reaction by ASIC to poor advice that was given to some individuals with limited recourse borrowing arrangements where they had less than $200,000 and were misled into thinking that gearing into property was appropriate, Mr Colley said.
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