Speaking to SMSF Adviser, FOS lead ombudsman for investments and advice June Smith said one of the common SMSF-related matters FOS has seen over the past 20 years is where practitioners have failed to properly take into account the client’s individual circumstances.
“This includes, for example, whether the adviser has turned their mind to the costs of administering the SMSF and whether the amount of funds the client has is really appropriate for an SMSF structure,” said Ms Smith.
“The other common error we see is whether the adviser of the accountant has turned their mind to whether the client has the capacity to really understand and undertake trustee responsibilities.”
Insurance in relation to SMSFs, whether the practitioner is fully licensed or not, she said, is another common dispute area.
“That is the life or permanent disability insurance that a client might already hold in their existing superannuation product,” said Ms Smith.
She referred to some of the issues in practitioners addressing insurance with clients, previously highlighted by the Fold Legal.
“A number of lawyers in the industry, including Fold Legal, have been talking about the way in which accountants can and cannot engage in advice on specific life insurance products,” she said
Ms Smith said this could be within the SMSF environment or within existing superannuation products that clients may already have when they come to the accountant.
“What we would say is that accountants do really need to understand their business model and the licensing structure that they have decided on; particularly if they decide to do nothing or become an authorised representative,” she said.
“[They] just need to understand the boundaries in which they can legally provide advice to clients – what can they provide advice on and what can’t they?”
She also stressed the importance of proper record keeping, should a dispute ever arise.
“The client file should represent the journey the client and the accountant go on together. We encourage accountants to also look at their file, recording and note recording on their files to make sure the journey with their client, the advice that’s given to their client, the recommendations they make to their client and their client’s instructions to them about the advice are fully recorded on that file,” she said.
“Accurate file noting, and accurate recording of discussions is very important.”
